Universal Health Coverage: The Future of Healthcare Reform?

YANZHONG HUANG: Good afternoon. Welcome to the Council on Foreign Relations. I'm Yanzhong Huang, senior fellow for global health at the Council on Foreign Relations, and this is our final meeting of the new Universal Health Coverage Roundtable Series.

The meeting will discuss the council's new report, "The New Global Health Agenda: Universal Health Coverage." I said this report is officially released by the council, but the most important part and the most innovative part of the work actually was done by Dalberg, actually, led by Daniel Altman, Vicky Hausman and their teams.

So we – privileged to have three speakers for today's discussion: Laurie Garrett, Daniel Altman and Alex Preker. All three of our speakers' full bios, are included in your handouts, so I'm not going to repeat them, save to say that Daniel is director of thought leadership at Dalberg Global Development Advisors; and Laurie is senior fellow for global health at the Council on Foreign Relations and the only writer ever to have been awarded all three of the big Ps of journalism, the Peabody, the Polk and the Pulitzer, and she's also called by WHO Director General Margaret Chan as the foremost voice of global health. The third one – (chuckles) – just – not included in the handouts, but I heard what she say. The – Alex Preker – Alex is the head of Health Industry and Investment Policy at the World Bank Group.

So for time's sake, we're going to begin with brief remarks from Laurie, followed by remarks from Daniel. And after Laurie and Daniel's remarks, Alex will comment as a respondent to the report, and then we're going to open up the floor to questions and discussion. So without further ado, Laurie.

LAURIE GARRETT: Well, it's great to see you all here. Good afternoon and enjoy your lunch. And I'm sure there's more food if you feel, you know, necessary to dive out during my remarks to put another layer on your plate.

And welcome to the Council on Foreign Relations. If you've not previously been here, this is our Washington office. Headquarters, however, are in New York. In – among the global health team, one of our team members is based here in Washington, Tom Bollyky – there you are – and the rest of us are in the New York office.

For quite some time, this phrase, UHC, universal health coverage, has been tossed about. And it seemed for years that whoever was using the term had a unique definition for it so that it was very hard to get your hands around what are we talking about when we say we want universal health coverage. If you were a Western European, you probably thought it meant you want a single-payer system run by this national government universally available to everybody in your country. If you were an American, you may very well have thought, well, that's something that's going to go to the Supreme Court. (Scattered laughter.) And if you were in most of the middle- and poor-income countries of the world, you thought, what a nice idea; not ever going to really be a reality for us.

So at much prodding from the Rockefeller Foundation, to whom we're very grateful for the push to make this series of meetings and ultimate report happen, and Ariel Pablos-Mendez, who many of you probably know, who's now serving in USAID running global health programs, we tried to take this apart and deconstruct this whole concept of universal health coverage to find what's the bottom line that's a(n) actual workable target, realizing that there is a couple of trends that play into how you analyze this picture.

The first is this very substantial, dramatic increase in the size, scope and funding of global health that occurred between roughly 2000 and 2008 and is now going downhill post-financial crisis. Most of this surge was very much initiative-based, and so it was about very specific targeted health efforts. But the further we got down that path, whether it was distributing antiretrovirals or dealing with tuberculosis prevention or bed nets for malaria, whatever it might be, the more all the participants came to recognize that if you didn't have a health system in place and you didn't have systems of health financing that removed the probability, the near certainty of bankruptcy for poor households that were afflicted with a key provider having a major illness, a traffic accident or anything that would debilitate them or kill them – if you didn't get to that core, then everything else would fall apart, and you were basically setting up a giant charity construct that would be endlessly dependent.

And similarly, there has been a large body of literature going back for quite some time arguing back and forth about what is the role of the consumer or patient in their own health, and if all health is free, does it change the relationship between the provider and the consumer or patient and the commitment that the individual has to their own health protection – preventive care, diet, exercise, all of the above.

Well, there are obviously three big problems when you talk about providing health. The first is that we have a fantastic deficit of skilled health care workers globally. And this can be defined in every single category, whether you're looking at dentists, lab technicians, pharmacists, surgeons, registered nurses, health administrators, hospital administrators; in every single category we have a deficit of personnel. And the deficit is, of course, most acute in the poorest countries in the world, especially in sub-Saharan Africa, on a per capita basis. So that's your first challenge.

The second is that the delivery systems themselves are largely very weak – in some cases quite chaotic – with difficult relations between the private providing systems, or chaos, and the public providing systems, or chaos. In many countries, the relationship between the private sector of health, which is often the number one provider – or the majority of all health care is administered privately – the relationship between that private sector and the public sector is very testy, even competitive and angry, and a spirit of cooperation is not present. And in large part, it's because one sector requires a hundred percent out-of-pocket payments on the part of the health consumer while the other sector is largely publicly or fully publicly supported.

And this creates some obvious tensions for the individual as well. If you think you're going to get better care in the private sector but it'll bankrupt your family, what do you do? And then the – from the individual point of view, this question of bankruptcy is quite serious. The institute – the International Labor Organization did its own survey a few years ago looking at this question of the bankrupting impact of illness in the absence of health coverage. And their data points were quite startling. And what they were able to show was that in many societies – and I think, at this point, it is true of the United States – a major catastrophic illness can be the primary source of bankruptcy for personal and family bankruptcy. And we have not resolved this, clearly, in the U.S.

Well, I'm going to let Daniel speak to the particulars of what's uniquely discovered in this report, but the one tip-off I want to give you is – couple of things: First, when we – we thought when you look at the question of universal health coverage, it's best to focus on it as a financing question, whether it's personal economics, family economics, village economics, country economics. Coverage is about payment. And it's best to push aside as somebody else's issue to deal with whether coverage actually gets you anything. In other words, it is wholly possible for you to have some system whereby your pay – your health is paid for – you have a voucher, you have insurance, you're in a national plan, whatever it may be – but there's no health care workers when you get to that clinic, or the clinic is in shambles when you get there. So there three pieces to you to – to actually providing health care to everybody, but the one piece we're looking at is the economic financing piece.

And finally, I just couldn't help but notice that when the Dalberg group completed their analysis, they reached a key conclusion that turns out to coincide with the primary debate now inside the United States Supreme Court. It is a question of whether it is both feasible and desirable to try and build health coverage without resting it heavily on risk pooling, and that means some sort of mandate that both the well and the sick are in the same pool sharing the same burden, and that it is probably the only way to financially make it affordable for a community, a society, a country, a whole people.

And with that, I'll be happy to pass off from there. Yanzhong.

MR. HUANG: Thank you, Laurie. Actually, before the – Dan gets started, I'm – I forgot that we have some housekeeping rules to announce. This meeting is on-the-record, so you can feel free to use and quote today's discussion. But please turn off your cellphones.

And with that, Daniel.

DANIEL ALTMAN: Thank you, Laurie and Yanzhong. It's been a pleasure to work with both of you as we prepared this report. I should also thank the Rockefeller Foundation for its generous support of this work at CFR. It's a particular pleasure for me to be here presenting to you as a member of CFR. And I'd like to start by just speaking broadly about the potential benefits that we might see from universal health coverage.

There are a lot of different ways where we might find benefit in the universal health coverage program, regardless of what the exact financing structure might be. And I'm going to separate them into three. I'm going to talk a little bit about the macro-level efficiencies that you might obtain, then what improvements you might get in health outcomes, and finally, about benefits for households.

At the macro level – these are some of the benefits that get most attention, especially in this country, when we talk about universal coverage. One is – the simplest, perhaps, is if you get everybody under a single roof or the biggest roof possible, you could save a lot in administrative costs. And I remember back in '94 when I started to look at this issue, it was estimated that you could make savings of perhaps tens of billions of dollars by having a program like Medicare that covered people throughout their lives. That used to be a lot of money once upon a time.

But more importantly, I think there's an idea that if you have a universal birth-to-death health care system which has a large coverage pool, you're getting a lot of efficiencies in how care is delivered. You're correcting a lot of incentive problems that currently jack up prices and costs within the system – for example, between the various parts of a hospital and its practices and the practices that it contracts with and their billing systems and their technicians. There are a lot of incentive and holdup problems that economists have and can identify in that system.

It also helps us to coordinate care in a way that reduces waste. If the hospital and the rehabilitation center, the home health aides and the general practitioners are all connected, then we have less likelihood of wasted or ineffectual treatments.

It allows us to negotiate lower prices, as some countries have already done. With drug manufacturers, for example, France has negotiated, as an entire country health system, to get lower prices.

And finally, it can allow us to – and I will use the word ration high-cost care. When you are trying to provide health coverage for a large population, you find that you want to give the coverage where you get the most bang for the buck, and this is something that the United Kingdom has probably been a pioneering country in doing.

So there are a lot of ways where you might be able to capture efficiencies and lower the cost to an entire economy of giving decent health care to its people.

Now, just as important are what you're getting for that money, or what – the health outcomes that you're getting for that money that you pay. And it's worth talking about where those benefits could arise. It's not the focus of this report, for reasons that I'll explain later, but I think it deserves mention.

First of all, you would expect that more people would get some kind of care if there is universal coverage, and you would also expect that more people will reserve – will receive some formal medical care, what we consider advanced, technologically enabled medical care, as opposed to traditional medicine, which can be ineffective or even counterproductive. As one of my colleagues over at the Intel-Grameen social enterprise said, they're getting care now, they're just getting it from the quacks. And so to the extent that you can shift that towards formal medicine, that might have benefit.

Also, because of the coordination of care that I mentioned earlier, you tend to have fewer errors, people getting the wrong treatment, that could actually harm them, as well as being inefficient. But we also find that you're treating patients earlier. What happens in this country, for example, quite often is people wait until something is really bad and then they show up at the emergency room if they can't afford to pay for care through normal channels or if they don't have insurance. We could avoid something like that if we had universal coverage.

Finally, perhaps most importantly, there's much more incentive for preventive care. If you're paying the health costs of somebody throughout their life, you want to start early with preventive care so that those costs will be reduced over the course of their life. And these – all of these factors could help to lead to better health outcomes.

Now, in addition to the macro-efficiencies and health outcomes, we can see some possibilities for gains within the household. One which is quite important, that Laurie was alluding to earlier, is the affordability of care. It's not the case that the poor people consume a smaller percentage of their income in health care. They consume about the same percentage of their income in health care. But because their incomes are much lower, they get a lot less care. The cost – the prices of care are not proportionately lower. So to the extent that we can mitigate that, it could be a good thing. And it's especially important if you're worried about public health, because if people anywhere in your society aren't getting treated for diseases, you have problems of contagion that could arise, especially in countries that have problems with epidemics on an unfortunately somewhat regular basis.

But even more, beyond the affordability of care, just going to a doctor or getting some sort of basic treatment, there is the potential benefit of risk pooling. And this is the genius of insurance, as any economist will tell you, that you're able to pool risk with a large group so that at no time do you have to make some extraordinary outlay in order to cover your costs. This is extremely important, especially when the out-of-pocket cost of health care is high, which it is in many of the developing countries that we may talk about today.

And the final benefit, I think, that could accrue to households and is worth noting is in human capacity. An adverse health event in the household, especially of poor households, can have a lot of negative effects, not just on the person who has the health event, who might not be able to work, might not be able to be productive, but they might not be able to take care of their children, their children might therefore suffer some effects of this. There's a whole cascade of effects that can arise.

And so if you were able to somewhat – to somehow mitigate those health disasters and, in fact, as I said, disconnect them from financial disasters as well, through risk pooling, you might see knock-on effects in human capacity. And that's something that researchers really (have/haven't ?) investigated.

So these last benefits, these household benefits, are the ones we're going to focus on today, and there are a couple reasons for that. One is that the macro-efficiencies that we've spoken about have not necessarily been the biggest focus for a lot of developing countries that have delved into universal health coverage, because they haven't had much of a health system to begin with, and thus, you know, it's not as though you're moving from one very sophisticated system to another and seeing what efficiencies you might capture. You're sort of building a system from scratch, in many cases, and you're building UHC at the same time as you're building the health system itself.

And another reason why we're focusing on the household benefits is because those health outcomes are often very difficult to determine in the early years of a UHC program. And since we are in the early years in many developing countries, the evidence is scarce, though not non-existent. If some of you would like to follow up with the work of Gideon (sp) and Diaz (sp) that's cited in the paper, you can see quite a few studies that are trying to gauge the early effects, often looking at things like infant mortality, which you can gauge today rather than looking 20 years later to see how healthy somebody is. And there have been pluses and minuses. In some cases you find improvements in health outcomes; in some cases you find almost no effect. But it may be early days to gauge that.

So for all of those reasons, we chose to focus, especially in a short paper like this, on these household benefits, which should be almost immediately perceptible. If you're trying to reduce the financial burden of adverse health events in households, that should be something that we can see right away. And in fact we can. So that's what I'll be outlining the evidence on for you.

What I think is a useful bottom line here is to think about how we might create a virtuous cycle of less financial burden on households, better health, more investment in health, and then less financial burden and more investment in health going forward. You know, health is such a fundamental aspect of development, the best development economists in the world seem only to agree about health as the one sine qua non, the one thing you need to get off the ground. Even the evidence on education, which also seems so fundamental, is much more mixed. But if you can get reasonable health status for people in a poor country, they have a much better shot of turning it into a rich country. And so we want to use the tools that we have – and UHC is one of them – to perhaps set in motion this virtuous cycle of better health investment and then better health for future generations.

Well, let's talk about a few of the issues that come up when you start to consider a UHC system and how to capture some of these household benefits. One is the affordability of the program itself for households. How easy is it for them to actually opt in to the system and to use the services that might be provided to them? One issue that comes up constantly is that of user fees. And there are a lot of different ways to gauge user fees. It could be a copayment for a physician's visit; it could be some sort of deductible; it could be a percentage of costs. User fees have almost always been found to discourage people's use of care. And if the idea of universal health coverage is to increase the access of care, you have to make sure that it's within the ability and willingness of people to pay.

One tool that you can use to assure that to some degree is a cap on annual spending. You can say, OK, well, we have user fees, but only up to $50 a year, and after that everything's paid for. So these are sort of two variables that you can already tweak, or two dials that you could tweak as you're designing your UHC system.

But I think just as important as these variables are the ones that are related to risk pooling. We've seen a lot of different systems grow up around the world. Some of them were spoken about, in the first roundtable in this series, by Bill Schaue (ph), where you have different pools set up for different populations. You might see one health insurance pool for government employees and then another one set up for the private sector, or you might see one for the military and then another one for private sector. You might see them set up on village-level basis, so that each little village or cluster of villages has its own mutual insurance. We have sometimes seen the separation between people who are in formal and informal employment, so that you have some sort of employer-sponsored or -provided health insurance for those in formal employment, and then for informal employment there's a whole other system that's set up by the government.

This kind of segregation often takes you into trouble because, as Laurie pointed out, if you want to really achieve the genius of risk pooling, you need to have a big enough pool. You need to have people with different health status. And the more that you separate them by variables that may be related to their health status, such as whether they have a steady government job or they have formal employment, the less benefit you're likely to get out of risk pooling at the household level.

Another issue that comes up sometimes is enrollment. Some of these programs are mandatory. Some of them are voluntary. With the mandatory ones, sometimes even though everybody's supposed to get coverage, they have a registration process which is extremely difficult and onerous. And sometimes you have people who don't even have an official national identification number or card and it's very hard for them to actually sign up for the insurance which is their right. For the voluntary programs, we run into potential problems of adverse selection. Who are the people who are going to sign up for health insurance? You can bet that the first ones there are the ones who think they might be getting sick soon. This is something we're well familiar with in the U.S. And we've seen it happen. We've seen death spirals of insurance plans that occur as a result.

So these are all issues that need to be taken into account, not just to ensure the success of the program, but to ensure that these benefits that we talked about percolate down to the household level.

So in the paper, we have a few examples of some programs that are already in existence. We've drawn a little bit on the UHC Forward database from the joint learning program, which is referenced here. But I think what I'd like to talk about more is whether it works, whether we actually see evidence that these benefits can be accrued and what's associated with the accrual of those benefits.

Well, for affordability, definitely yes. When we have UHC programs that don't have overly onerous user fees, we definitely see access to care improving. And along with that, not surprisingly, we see utilization of care rising as well. But that can sometimes be a bit of a double-edged sword, and sometimes it occurs, to the surprise of the government organizing the program or whatever the entity is that organizes it, because of moral hazard. You lower the price of care; people get more care; they might even be a little less careful about getting sick because the consequences are not so great. This happened in Taiwan in the '90s. They got a lot more utilization than they were expecting. They had to fiddle some budgets and see how they could adjust for the future.

Another issue, though, with affordability is that the out-of-pocket cost doesn't always fall even when you set up a UHC program. And you might ask, well how could that possibly be? Well, we've run into some cases, for example in the Philippines, where the private providers that are reimbursed by the government see that the government is passing on only a small percentage of those costs to the consumer and they say, well, you can jack up the prices, basically charging the consumer the same as what they used to pay, but we're getting a bigger reimbursement from the government because the consumer only pays a small share of that. So some of these systems can be open to gaming, and that's something to look out for as well.

But overall the evidence is quite strong that the affordability is improved, the access to care is improved, and so is utilization. In terms of evidence for the benefits of risk pooling, we certainly see big drops in catastrophic spending, and that is, as I said, probably the biggest benefit that we can expect and the most desirous one at the household level. And we see those in different regions all around the world. Several examples are cited in here.

On human capacity, which was the third of these household benefits that I mentioned, we are starting to see some results. As you might expect, since it's somewhat indirect, it could take a little more time, and the scientific methods that you might use to gauge that are a little more difficult because there are a lot of things that could go into human capacity. So trying to figure out what's the delta that you get from this kind of program could be difficult. You need a randomized controlled trial or some other perhaps quasi-experimental design. Doing a rigorous paper is not the easiest thing, but we've seen a little bit.

We've seen some benefits to worker productivity, as you might expect. And I think, by the way, some of the best proof that insurance coverage can improve worker productivity is the fact that you've seen some large employers in poor countries, like Pakistan for example, setting up basically HMOs for their workers and paying the bulk of the cost because they know that they'll recoup that in terms of reduced absenteeism and higher productivity. And we've mentioned a couple of those in the report.

Also, in terms of human capacity, though, we are starting to see these effects on the next generation, that children's school enrollment, for example, in some of the Chinese rural health insurance demonstrations seems to go up, which could be because it's – they're not required to stay at home and take care of their parents when they're ill – something as simple as that. And these are the kinds of things that I hope that more economists like myself will look into because I think that they make a powerful case for the humanitarian aspects of universal health coverage.

So I'll just end by giving you a little bit of a prospectus for the future. Obviously there are many reasons to consider a UHC program. As I said, there are many different models; it's not all about single payer, as Laurie said. But there are many potential benefits that you could capture. There's not rigorous evidence supporting all of them yet, but that's partly because we're in the early stages when it comes to the developing world and UHC. But I think that the household benefits that have been documented so far make a strong case.

And when you see what the political leaders who have ushered in UHC and their countries have spoken about, it is indeed these household benefits that they say we cannot have our people burdened not just be health events, but by the catastrophic costs that come – can come with them if we hope to grow into the future. And some of the most far-sighted leaders have recognized this, and I hope that more will in the future. Thank you.

MR. HUANG: Thank you, Daniel. Actually when I was listening to your report, received this message from the Kaiser Family Foundation about recent poll data on the American attitudes toward the Affordable Health Care Act that said there was a perfect divide on the Americans' attitudes toward the act. Indeed they found that more than 50 percent of all Americans still believe that the Supreme Court should rule it's unconstitutional, the individual mandate requiring nearly everyone obtaining health insurance. So – (chuckles) – despite that the – all those – the benefits that Daniel alluded to, the – it seems that Americans still haven't realized that. (Laughs.)

MR. ALTMAN: Well, I'm not a constitutional lawyer, but this may be unconstitutional. That doesn't mean it's a bad idea. (Laughter.)

MR. HUANG: So, OK. Alex?

ALEXANDER S. PREKER: Well, thanks very much for having invited me here, Laurie and others from the – from New York, and I – it's – I'm delighted as a preliminary to my – to be here in this office. It's – congratulations to the council for having set up this new office here. So it's really nice. We'll have to come and have some of our meetings in the World Bank here.

MS. GARRETT: Yeah, that long walk two blocks away.

DR. PREKER: Exactly. So we – I'll forego the reimbursement on the taxi this time.

MS. GARRETT: (Laughs.)

DR. PREKER: So this is an immensely important topic, and it's interesting because Rob Hecht, who's here from Results for Development – he and I were working together in 1993 when the bank was doing its world health report on "Investing in Health," and one of the interesting things at that time was that we came up with some statistics that showed that although 90 percent of the disease burden in the world is in developing countries, only 10 percent of the financing is there. So there was this very big disparity between where the needs are and where the money is at the global level.

Interestingly enough, if one looks at the data now, you know, which is almost 20 years later, it's not like that. It's 60-40, which demonstrates the change that has happened in the last 20 years in terms of distribution of financing globally. So you now have the BRIC countries – if you take the BRIC – and Goldman Sachs had coined this idea – Brazil, Russia, India and China – with "S" in the – in brackets – South Africa (was ?) sort of – was supposed to be part of that – and then, once they got through that, they added "N-11," the next 11, which includes countries like Indonesia and Malaysia. But what's interesting is how have those countries now performed in terms of – in terms of this agenda? Because one could say that, well, it's the BRIC N-11 that really would have the largest capacity.

So let's look at whether or not those countries have actually been able, during that 20 years, while this shift in funding has actually taken place – you know, has there been a change in the way that the population might have access to that – that financing? So if we just look at the table now in – on page 10 for a second – and I think Daniel kind of highlighted this – but I just want to draw out a couple of observations on this table. So it's on Page 10.

So it's interesting that when one looks at places like Kenya, where the size of the pool is 7 (percent), and then out of pocket is 51 (percent). And then you go down the list – Mali is the same, 3 (percent), 52 (percent); India a bit further down, 9 (percent) and 50 (percent). So the observation is that, you know, countries that really have poor coverage or poor pools end up spending a lot of money out of pocket. And of course the troubling part is then, when you now go further along and you see a place like (Turkish ?) Republic, which is 97 percent coverage – well, it's still got 40 percent out of pocket. And if you go down further on the list there – Philippines, 80 percent coverage, but 52 (percent) – (5)4 percent out of pocket. And then you go down to the bottom, which is where we would like to see it, Colombia and Thailand where 88 percent and 72 percent for Thailand; Colombia, 88 (percent). And there you have 8 (percent) and 16 (percent).

So I think this where we now – need to now be thinking a little bit. How is it that at least two countries have succeeded in reaching the coverage level and then, at the same time, doing something about that out-of-pocket exposure that they – that the population has to health expenditure? And then other countries that, you know, one would say would – you know, they're part of the BRIC – you know, India is there; I don't see many of the other BRICS in there. Chile is not – no, China is not there.

MS. GARRETT (?): Brazil is.

DR. PREKER: Yeah, Brazil is there. So Brazil is there as well.

And these countries are actually not doing well in the distribution of the – of the funding and clearly have not succeeded in putting in place a mechanism that dealt with that out-of-pocket side of the expenditure. So that raises a couple of issues, which I think is really the crux of the matter is that, you know, there's an ideological debate about scaling up and then there's the pragmatic debate about what you do about it.

And I think this, in some ways, is also the thing that U.S. is facing right now. You've got the – you've got the ideological debate, but then you have a pragmatic debate. You know, what are the solutions and how do you actually achieve it? And that now – one of the pragmatic solutions is being challenged of course in the Supreme Court. But, you know, this was one of many options. It was not the only one, but it was one of many. And now that's being put to a test to see how consistent that is with other principles in society, and that's precisely what we find in many developing countries.

So I worked a little bit in Ghana in the early – well, 2003 to 2007. And we helped the Ghanaian government at that time put in place a scale-up program for health insurance, essentially what – at the time that we started working with the government, they had – they had inherited a British-style health system, which was basically free care, universal coverage. So going back about 45 years, that's the kind of system that they had inherited. So on the – on the surface of it, you would say, well, that's great; you know, they – I mean, they came from a background where they had full coverage, and everybody had entitlement to services.

Well, within 10 years after the colonial powers left, that system collapsed because the system didn't have enough money, and so what happened was that although you had a rule that said everybody has access to care, that rule eroded in practice, and people ended up spending money out of pocket because there wasn't enough money in the system. And then the government even came in with – initially, it was an informal kind of payment, but then the government eventually came in with a rule that said, well, if you are going to come to a public clinic, you have to pay something because, you know, our clinics are going bankrupt, so the Bamako type of thing that, you know, why shouldn't we be getting part of the money in the public sector, because we know you're paying the money anyways out of pocket, so why shouldn't the government benefit, and so we can finance part of our health service with that money out of pocket?

And so they brought in a rule that – which was called in Ghana a kind of a nice term – it's called "cash and carry." You know, you come in with your cash, and you carry away the services. So they brought in that kind of a system. And that worked OK for a while. It did help a lot, studies that were done that showed that – like in Bamako, it showed the institutions that were collecting and were allowed to retain those fees that they did collect out of pocket ended up being better staffed and ended up having at least drugs so that when people went there, they actually got treated, whereas the clinics that didn't have that, although in principle, there was free care, basically, people were getting nothing. So they got free care, but they got free care to nothing.

And I think this is what we are seeing in some of these places here. When you look at the – when you look at some of these statistics – (inaudible) – public, when 98 – 97 percent is free care, but clearly, they're getting nothing, because they are paying 40 percent out of pocket. So, you know, they are not getting what they want, so they are – they are choosing to finance.

OK, so Ghana then decided, OK, we're going to abolish the "cash and carry," and instead of that, if people are willing to pay, why don't we, instead of having people pay at the point of service, why don't we just put that money in a pool, and the – I mean, clearly, the population is willing to pay, so that's good, so let's now take advantage of the fact that the population is willing to pay, we'll put that money into a pool, and we'll make that into an insurance program so that that way, everybody contributes a little bit, because you know, the evidence is there that they are willing to pay, but instead of paying when you get sick, people will pay ahead of time, and we create a health insurance system. So that's essentially what they did. They created a health insurance system, and then they said, well, but you know, many people can't afford to make that small contribution, so we're going to subsidize the people who can't afford to pay the premium.

And what ended up happening then, of course, is that they put in place the system, and coverage went up very quickly to 70 percent. And then the thing unraveled because what was happening was all sorts of administrative things: The system wasn't able to clear the bills; they weren't able to handle the claims; they weren't able to register poor people, so even though poor people had access to the services, actually, poor people weren't getting registered, not unlike in the U.S., where you have the Medicaid patients – often there's a – you find – (inaudible) – statistic shows that many Medicaid patients actually don't register. It's either too complicated, or they don't register, or they may be illegal workers or whatever. There's a lot of reasons, but they don't get into the system.

And so we found the same thing, that, you know, even though you have the system in place, the people who really should benefit, the rules are there, but they don't come in. And so I think once again we are seeing this here in this table, and which you are highlighting in this report, that the rules by themselves aren't enough unless you couple them with some pragmatic institutions. You know, and part of it is the human resources that you were mentioning. But there are a couple other very important things. And you know, drugs and equipment are two very important elements of a – of the health system that we often forget. And when you look at the expenditure in a health service, often the big expenditure item is actually drugs plus human resources. So in many – in many emerging economies, you can have as high as 50 percent, even 60 percent of the whole health expenditure is actually on pharmaceuticals.

So once again, it means that a single thing can't solve the problem. You really have to have – it has to be an – universal coverage can't go by itself. It can't just be the front end where you're collecting the money, and then you say everybody is covered. It has to go along with institutional reforms. I think the report nicely highlights some of those institutional things that you think are important in this.

And then I just want to end on one note is that those institutions, we often think kind of in concrete terms that those institutions are things like buildings and, you know, bodies – buildings and bodies and drugs and the equipment. But I'm now beginning to work in a part of the bank which looks at how better to work with the private sector. I work in the IFC part of the bank. And I work in a part of the IFC which is called the investment climate department, where we are looking at investment policies toward the private sector and whether or not those investment policies actually encourage the private sector to, one, be functional, and second of all, to have some sort of a social benefit.

And it's really interest, a report that we have just come out of, following a survey that we did in the Africa region, which shows that many governments put in place programs that intend to mobilize resources and energy from the private sector. In fact, I think the statistic was somewhere close to 80 percent actually have rules about that. And only 6 percent actually implement them.

So one of the big challenges, I think also in the insurance side, which we find in many countries and which once again you are highlighting in this report, is that the capacity to implement really has to be there, and it goes beyond the brick-mortar, the bodies and the – and the drugs. And it includes some of the rules and regulations and how those rules and regulations are enforced, but also the culture of the population that's using those services and whether or not those populations end up behaving in a way that's consistent with the new system that's in place.

And with that, I'll just highlight a small final example that once again comes from Ghana, where you had a mother that came to a clinic with a child and was somebody that came from a background where she could have belonged to – you know, she could have belonged to the insurance scheme, or she could have been subsidized through the subsidies program. And once she got to the clinic, she didn't have coverage. And so the clinic said, well, I mean, the rules we have is that you have to have coverage, and if you don't, we can't give you care.

And so she was turned down. And this of course became a very big scandal. It became a – you know, it became a political fiasco for two reasons. One, it was a political fiasco because, you know, why should a mother with a young child be refused care? You know, so that – you know, there was a moral aspect on the treatment part. But it was also a fiasco because it was a PR fiasco because of course if she had gotten the care, you now destroy the whole health insurance system because every other mother with a child would say, well, when we get sick, we can just walk in and we're going to get care, so why should we bother paying? So it opens up the floodgates with moral hazard and noncompliance.

And I think that really demonstrates the very difficult position that governments and countries are in that are trying to do scale-up, that when you are trying to put in place things that will work, you will be forced – you – to confront that moral dilemma when the child and the mother comes to the clinic and where you have to make a judgment call. And unfortunately, of course, what often happens is that the individuals or the health care providers that are at that point of conflict, in the front line, end up making the wrong judgment calls at that point. And that of course is the big challenge that we face in many of these reforms that we're doing.

So I think this is a tremendously timely report. Congratulations on some of the insights that you have in it. And we look forward to teaming up with you and taking this agenda forward, Laurie and others. So –

MR. HUANG: Thank you, Alex.

And to the story that you shared with us on Ghana actually until very recently happened every day in China, I believe. (Chuckles.)

The – so as a presider, I have the privilege to ask the first question. This question will be about the relationship between the universal health coverage and equality. I think it is addressed in the report, although I probably didn't – in the talk, didn't allude to – but the – my question is that universal health coverage, by definition, means fairer, more efficient financing that pools risk and encourages prepayment to share health care cost equitably across the population. But the report seems to also indicate that there is no strong evidence supporting that spread of universal health coverage necessarily reduces inequality of health care access. So my question is: In what situation would universal health coverage lead to persistence, if not exacerbation, of inequality?

MR. ALTMAN: Well –

MR. HUANG: Daniel?

MR. ALTMAN: Yeah, in answering your question, Yanzhong, I'll draw on a conversation with Julio Frenk last year. He's the former minister of health in Mexico and now dean of the School of Public Health at Harvard. And we were talking about what would improve health outcomes in developing countries, and we discussed the extension of care on a broader basis. And he said it's not going to make a fundamental difference to the lives of a lot of the poorest people until the bigger issues of inequality are addressed; that it – there is a chicken-and-egg problem here in the sense that inequality can breed poor health outcomes for people at the bottom, which can then worsen their outcomes in the labor force and thus worsen inequality in the long term.

But I don't think I would start looking to universal health coverage to be a major reducer of inequality until some of the more fundamental drivers of inequality were addressed. It may have some effect on the margin, but there are such enormous other drivers at work right now – for example, just the opening of markets through globalization seems to decrease inequality between countries but increase it within countries, in many cases. You know, with that kind of wave percolating through your economy, it might be difficult to pick up the effect of UHC. But I would never underestimate the abilities of a skilled empirical economist in a randomized controlled trial.

MS. GARRETT: (Off mic.)

MR. HUANG: OK, I wonder – to both Laurie and Alex, can you respond?

MS. GARRETT: Well, I – I'd like to take Alex's bottom line, the woman in Ghana going with her child for care and being turned away. There's a number of ways that scenario could have played out, and I've personally seen it play out in every one of these ways. One is – goes to the inequality question.

I remember very well doing a series of following women who had babies in sub-Saharan African countries with high fevers. And it was fevers where it's a matter of life and death to seek appropriate care within – you have maybe a 24-, 48-hour window or the baby dies. In most cases, it was either – it was measles or malaria.

And what I saw was, these women typically lived in the rural areas, but their husbands or the fathers of these children were typically in the cities, where they had a second family and lived a completely separate life. The women could not and would not violate relations with their husbands to go straight to the nearest clinic. They would go to the city, find the husband – with the ailing baby – get his permission and then go to the clinic. So no universal health coverage access is going to save that baby's life if the inequity in the gender relations in those marriages and across whole societies is an impediment to getting the appropriate care when you need it.

But also with this example of the mother and ailing child, she may very well have had coverage and then gotten to a clinic that had no M.D. in the entire clinic, had no equipment, had no skilled personnel, or had – as we've all seen, if we've traveled widely in poor countries, had an alleged doctor, alleged medical staff, alleged equipment, and no electricity, no running water and no appropriate hygiene, so that seeking care could actually be a life-threatening event. So if all pieces are not in place, you obviously don't get to nirvana and you don't get to equity.

And then I guess the final piece of the equity question is something that we all see around the world, the difference between rural and urban, and one key piece of that is not just that health provision is very concentrated in urban areas but also that your ability to access it will depend on your personal finances because you still have to pay for transport. So even if once you get to the clinic, the care is covered, you had to get there, and that becomes the other rate-limiting step that is class-biased.

MR. ALTMAN: Yeah. Can I just add one sentence onto that, which is, a lot of people say, isn't it easier for poor people to go to the hospital than rich people, because the value of rich people's time is so much higher – you know, they – if you have a hundred-dollar-an-hour job versus a minimum wage job? No, you're looking at it backwards. The problem is that that that minimum wage means a lot more to that person than a couple of hundred-dollar-an-hour hours to a wealthy person, and it's much harder for them to take that time away in going to the clinic, even if all the pieces of the puzzle, as Laurie said, are there.

MR. HUANG: OK. Alex?

MR. PREKER: OK, so on the universal – and equality, there's a troublesome dimension to that, and that is that in higher-income countries, it makes a lot of sense. If – you know, I'm Canadian. In Canada, everybody has access to care, and that means poor people and rich people have access to care, and Canadians are rich enough so we can afford to give away care to both rich and poor people.

But the problem is, if you're living in Mali or in other very low-income countries, and you've got a hundred dollars, and you've got a hundred people, and you give $1 to each one of the hundred people, both the people who are rich and the people who are poor, then everybody's getting $1. But if you took the hundred dollars and you gave the hundred dollars to only the 20 people who are really poor, each one of those 20 people would be getting $5, and the other people would be getting – maybe spending other money, but they have the money to spend out of pocket, and therefore you'd actually be more successful in having equity by not extending universally and spreading the finances thinly across the whole population.

So I think this is where we have the tension, I think, at low-income countries between the ideology of what we think is universalist and therefore, you know, it's good for the poor, and the reality of the economics; that when you actually do that and you execute it, you're actually taking money away from the poor whenever you have a program which is universal.

MR. HUANG: Very interesting.

So we have about 35 minutes. So I want to open the floor up to questions. Please identify yourself and your affiliation before responding. Please also flip your tent card to indicate that you have a question, and we also allow one-finger rule at – if you have any quick follow-up remarks.

So I'm going to start with Jeanette.

Q: Thank you.

MR. HUANG: Oh, by the way, Jeanette is the new managing director of the Rockefeller Foundation in charge of health.

Q: Thank you. Very interesting for me, because in fact it's a discourse that I am not familiar with. In fact people that are from developing countries, in general, when we talked about universal health coverage, we basically talked about access to care, not necessarily about the financial impact. So it has been very important for me to sort of listen to the discussion. I understand that there is an issue there; that basically the implicit assumption is that if you increase coverage, financial coverage, you will increase access and then you will improve health outcomes. I would challenge that, though, and I think that we need to discuss, probably in a different forum, about that implicit assumption.

Now I'd like to make a comment – a couple of comments. The first one is the comment on universal health coverage and equity. In fact the issue there is in whatever dimension you are talking, if it is the financial dimension or the access dimension, in the road towards achieving 100 percent – let's say from 10 (percent) to 100 (percent) – not all the groups of the population benefit the same. So in fact when you begin to implement this – basically, in the road to universal, you create more inequities, unless you focus on beginning with the worst-off, which is what UNICEF in fact is doing in its newest strategy. They are basically making the case. And if you do the costing and the economic exercises, you realize that it's much more cost-effective to do it in that way.

And then the other comment – and then I just want to use Table 10 as an example, because here there are some examples. There's one example that I know very well, which is the example of Chile, because in fact I'm Chilean. And you are saying here – the tables say here that we implemented the universal health coverage in 1979. I would say that in fact we destroyed universal health coverage in 1979, because until then we had basically a system that had one pool that provided access to everyone. The depth of the package, though – of course the system regulated through waiting lists, and in 1979 what happened is that the pools were divided into two, one private – I mean, several private, 15 in fact – and one public.

And why I'm putting this example – not because I'm from Chile; I'm putting this example because it depends on your definition. I mean, if you think about the former Soviet Union countries, according to the definition of universal health coverage, they did have universal health coverage, and from one day to the other, they didn't have it. And what we are having now, it's basically the rebuilding of the universal health coverage using different instruments.

And you can argue that in fact, it was a theoretical universal health coverage because people didn't get covered. In fact, they did; the issue was that they didn't get access to services.

So what I'm trying to say is that the discussion, I think it's a bit more broader because it has to do with some historical process of reforms that I think Alex said in his intervention. And it's very interesting to continue this conversation.

MR. HUANG: Jeanette, you mention the Soviet case. This actually remind me of China. Actually, China recent – just a couple of days ago, announced it has achieved universal health coverage. (Chuckles.) So covering 100 – 1.4 – nearly 1.4 billion people, well, that is truly an achievement, right? (Chuckles.) Laurie.

MS. GARRETT: I think you raise some very important points, and they actually were all points that we debated and grappled with through this entire process – you know, trying to find a way to focus in and not end up producing another 1,000-page document that nobody reads. Well, hopefully somebody reads this. (Chuckles.)

But, first of all, yes, different countries have tried to roll out universal health coverage in different ways. And many have, in fact, done exactly what you said: target the neediest first and work your way backwards. But as Daniel pointed out, many countries, this being one of them, has rolled out universal health coverage in ways that do not reflect needs, but rather specific groupings – military or – in our country, really tying access to coverage – not care, but coverage – to site of employment so that it became part of labor negotiations beginning in the early part of the 20^th century. And companies that had organized labor tended to have good health insurance coverage, and those that didn't lacked it.

So different countries have rolled out their systems in various ways. And I think often, the one that gets the most praise is what Julio Frenk rolled out in Mexico. But I think it's also instructive – and we have some citations to follow up if there is interest – I think it's also instructive to see the struggle that Brazil is having right now, because Brazil did, in fact, roll out very aggressively for the poorest population tier and created great tension within the middle class in Brazil that they're still struggling to cope with and to figure out what is justice and equity with some payment and some nonpayment in a system as complicated and massive as the nation of Brazil.

MR. ALTMAN: Yeah. It's – I agree very strongly that these are important issues to take into account, and I think that everything you said makes sense in theory. In practice, when you deal with the logistical and political implications of rolling out a system like this, it seems like, from experience around the world, it's easier to roll out a system to everyone and then start layering on the services rather than to start with a lot of services for a small group and then start layering on other populations for partly the same reasons that Laurie was referring to. But I would also point out that if you just start out providing care to the poorest, you're losing a lot of the potential benefit of risk pooling because you're targeting a population that's the sickest in society.

MR. HUANG: Alex, you have a –

MS. GARRETT: Add anything to –

MR. PREKER: No.

MR. HUANG: OK. Irena (ph)?

Q: Thank you so much for such a great panel, first of all.

I have a question related to a presentation, two months ago, of Georgian President Mikheil Saakashvili at the World Bank. And in his speech, he spoke about achievements in Georgia. And one of the achievements was hospitals all around the country. He calls these hospital like five-star hotels. And these hospitals are available for everyone.

And in this context, I would like to ask this distinguished panel and especially Alex how it was made by coverage, how you see this model, because Georgia is not a rich country; probably it's a(n) emerging economy; maybe we can call it from poor-to middle-income country. And do you think this kind of model could work for other countries like this kind – this type of countries?

And the other question is about equality, because even President Saakashvili stressed that all people, rural people, poorer people could come to this hospital. They are – have modern equipment. But anyway, they are not equal. I'm – but he said, for example, once in their life they could be – could have appropriate service – and how it's related to question of equality.

And following – so Canada is famous for its health coverage. Why other countries, for example, United States, cannot follow this example in health coverage?

MS. GARRETT: I'll take the latter, you take the former. (Laughter.)

MR. PREKER: OK. Yes, then I don't have to defend the Canadian system. (Laughter.)

Well, I think Georgia is quite typical of what happened in the – you know, the states that were part of the former Soviet Union after the collapse of the – of the former Soviet Union. I've been to Georgia several times, and – so I know exactly what you're talking about. The problem was that very shortly after the transition, the bank – the government in Georgia basically went bankrupt. It had a compression of economic growth, of – I think it was, like, 70 percent. It was one of the most hard-hit of the Eastern European countries in terms of – in terms of collapse of the economy.

And so essentially the government was bankrupt, which meant that they had a very large stock of facilities, hospitals and also doctors that were on the payroll, because everybody was a civil servant on the payroll, or at least a government employee, and no money. And so people were not – basically, the salary bill stopped, people would no longer get paid, and there was no drugs in the hospital. I remember the last time I visited, which was I guess now close to 10 years ago, but at that time, you know, I had to walk up seven stairs because, you know, there was no light, there was no electricity. It was – basically, the service had collapsed.

So in a context like that, you know, if you have one functioning hospital that actually is functioning, I mean, there is a need for tertiary care in Georgia like there's – anybody – anywhere else in the world. I mean, this is a country – it has a lot of chronic disease and a lot of acute disease that need to be dealt with. And, you know, you can die in the street or you can die in the hospital.

But the issue, I think, that Georgia faces with this kind of a situation was – it's the same as we face in many other parts of the world – is if that hospital, now is functioning, was reserved and could be used only for the acute care that it was built for and not be giving primary care and stuff that could be given in clinics, then you might end up having something that actually works. But the problem is, because the rest of the health services collapsed, if you have one institution that has been made functional and you have the rest of the service that's collapsed, even in Georgia, this is never going to work, because you can't have 6 million or whatever it is that your population is – you can't have 6 million people coming to one place and getting care for primary care. It just – it's just not going to work.

This institution will collapse unless, you know, it's – unless that institution sits on top of a – the pyramid of a large health service. So I think this is a – and it's a difficult dilemma many countries face, is because you like to have one place which provides decent care, but you're not going to – 6 million people are not going to be able to get care from that one place.

MS. GARRETT: When I – 14 years ago, I traveled the – all over Georgia looking at their health system. And I think that the Georgia example is actually an interesting one that – for you to have raised because the advantage that Georgia today has is that the vast majority of the society truly rejected the Soviet model of health, and what they were left with was something so horrible – I mean, some of the worst atrocities I've ever seen in health care delivery, I saw back then in Georgia – you know, physicians with no gloves performing surgery, not able to scrub beforehand because there was no soap. So there – in a sense, they have an advantage now in that the – there was very little support for keeping what had existed and great possibility of coming in with a clean slate and trying to do the right thing. And similarly, Canada built its health system long ago on a clean slate.

The United States has built incrementally hundreds of different health systems so thoroughly fragmented, each with its own interest groups dependent on its continued existence, that trying to create a single or even a workable financing mechanism is impossible in America. The best we can hope for is to make these fragmentary pieces work together a little bit better, be a bit better regulated so that they can't price gouge various elements of funding, and create better equity and pooling for the largest elements of the system. And that's what the health reform act tried to do. But, as you can see, there are many interests that seek – see that they will lose if that is fully implemented and therefore are very actively fighting against it.

MR. HUANG: That's exactly what Debbie Fuentes (ph) said: just 90 percent politics, 10 percent technical-institutional details. (Laughs.)

Let's see whether we have any questions from the participants – from the teleconference participants. Anybody?

MS. GARRETT: On the phone.

MR. HUANG: On the phone?

OK – (laughs) – nobody. So Ben (ph).

Q: Bart Szewczyk (ph), Wilmer Hale and G.W. law school. Thank you very much for all of your presentations. I wanted to ask, is there any empirical evidence between the degree of universal health coverage and long-term economic growth? I guess those studies would be probably difficult to do, but is there any evidence one way or the other?

MR. ALTMAN: Short answer is no. If you're referring to sort of cross-sectional-type of analysis, that would be very difficult because the universal health coverage systems are so different that to throw in a single dummy variable for them would not give you a very good regression. So not putting it into technical terms, I think that would be very tough to do, to look at countries in comparison to each other and see whether there was an effect on growth. If you looked within one country, you'd have a better shot of finding an outcome.

And there have been some studies even in the United States looking at Medicare. It's not completely universal, but it's universal for part of the population. And the idea was to take the burden of caring for the older generation away from people who could be otherwise productive in the workforce, in addition to all the other benefits that it might have. And you know, I think that there's some evidence to support positive effects, but spotty and not necessarily so generalizable across contexts that I would want to take it from one country and apply it to another.

MR. HUANG: Comments?

DR. PREKER: Yeah, I mean, there's been – recently, there's been the commission of growth – health and growth. So if you want to look at what they did, you – it's worthwhile just Googling that.

I mean, there's basically two problems. One is that we haven't agreed on what universal coverage is, and so it's hard to do regressions against something you haven't defined yet. And so it's not an easy thing to draw the correlation.

But there's a reverse correlation, and that is that countries that tend to go through rapid growth tend to become more inequitable during the growth phase (till you get ?) industrialization process. And during that inequity period, you tend to have health care becoming less equitable, like you saw in Georgia and other countries in Eastern Europe. So one has to be careful about the cause and effect there. But certainly if one looks at the world where you have rapid growth and economic growth, like China, those places – those places have become much more inequitable in health care. I don't think it's the health care that led to the growth, because you would then say, well, inequitable health care leads to growth. No, I think that's not the way it is. But I think you can expect to see inequity in health care appear when you have rapid population growth in some areas and where part of the population ends up having purchasing power, which means that they can buy care that the general population can't afford.

MS. GARRETT: Can I follow up?

Alex, I want to ask you about something. The – one of the things we've seen in the most rapidly expanding economies in the late 20^th or early 21^st centuries. If you look at China, if you look at post-Soviet Russia, you look at – less so at Brazil, and certainly in India, you see that as these economies explode, the public sector salaries for those that are not engaged in highly corruption-prone sectors do not keep pace with growth in the private sector. So there's the envy-of-your-neighbor problem, and that seems to compel, in a way, an increase in corruption in direct health provision so that – for example, I saw myself in China, a doctor will say to a patient, here's what – here's the free syringe; I can now give you an injection with it; it's been used before. (Laughter.) Here's the one that's still in its packaging, but that'll cost you $50. Do you want me to inject you with this one or this one? And that $50 is going to the doctor. So is there a way to have this economic growth without also enhancing not only the lack of equity, but also corruption within the health sector?

DR. PREKER: All right, I don't have the answer to that. I mean, we know empirically that countries that go through a very rapid growth period, you have social consequences. And so it's one of the things that is there. And you know, when you (saw ?) – the definition of emerging markets by Goldman Sachs is it's growth in the double digits with large populations and where you have population dynamics that's moving towards aging. So that's the – you know, that's the definition of an emerging economy, and I think in most of the emerging economy, you've had – you've had problems in the health side. So they go through a phase and then, you know – then eventually, when you have a sufficient middle class that ends up with political power, then that middle class starts demanding social services that are reasonable for the middle class. And that's what you're basically seeing now in both China and India. You have the growth phase, and now you have a middle class that's beginning to say, we're not happy with this anymore; we're – you know, we want change. And so (there's ?) this change happening in both China and in India.

MR. ALTMAN: (But ?) that creates an additional causality problem because it's the income growth that's leading to the health coverage, not vice versa. (Laughter.)

DR. PREKER (?): Yeah.

MR. HUANG: OK. Jesse?

Q: Thanks. All right, Jesse Bump, Georgetown University. I just wanted to point out there's a tension between what we in the global health community think about as universal health coverage, which tends to be focused on equity and focused on the poorest and largely I think that comes from the mindset that that's the missing piece in existing health systems. But, as we move into the sub-Saharan and other areas where there really aren't very many systems themselves, I wanted to point out that in the health systems I've studied, none of them have come from the poor. They're all built around a paying customer at the beginning. And as Daniel said, this amounts to a rationing question, and rationing means it's an ethical issue that then has to get solved at the implementation stage around the history, politics, and economics of a particular population. Thanks.

MR. HUANG: Comments?

MS. GARRETT: Absolutely.

MR. HUANG: (Laughs.) OK, fully agree. Robert?

Q: Is that working? OK. Robert Hecht from Results for Development. This looks like a great report, and I'll read it – read it carefully.

It seems to me if you look at what's going on around the world and try to understand the trends in health systems, health financing, access to care that Jeanette was talking about, financial protection, both of those dimensions, there – there's a lot of common language around universal coverage and there is some commonalities. But in my own observation, I think there are a lot of submovements within geographies and things are happening at different speeds and different ways, and I wonder if you've been thinking about that and would – will be bringing it out in some of your future work.

In my casual look at things, it seems like there are lot of what I would call second-generation changes in health financing arrangements and coverage in some of the middle-income regions: Latin America, which already has a long history going back to the '60s, '70s, '80s; Eastern Europe – some of the Eastern European countries that made dramatic moves in the '90s and are now – they're burnishing their systems and making some gradual changes; Korea, which has recently merged many of its risk pools into a single one; Turkey – there are – there are – there are some trends going on that I would call second-generation type ones.

In the OECD countries, we see this as – it's a – it's a – it's a never-ending process, so there are third- and fourth- – very interesting things going on in the Netherlands and in the U.K., and the NHS is constantly being reconfigured and reformulated.

So the notion that there's not a single ending point but there's a constant evolution and that individual countries and groups of countries are moving at different speeds, I think, is worth reflecting on.

In my own opinion, Africa is really at a stage of early experimentation and nothing more than that. There's a lot of hype right now, but – and there are some interesting things going on in places like Ghana and Rwanda and smaller-scale things in Nigeria and Kenya and places like that. But it's early experimentation, I would say.

I think that the part of the world which is most exciting right now is East Asia and maybe India added because there, with rapid economic growth, all the political and economic underpinnings are there for quantum changes within these systems, and that's what we're seeing in China right now. India is thinking very – in very big terms, and it feels – is feeling its oats or whatever you call it, and wants to make some dramatic moves, is watching what China's doing. And places like Vietnam and Indonesia and so on you see, again, attempts to really complete somewhat fragmented systems.

So trying to get a little more nuanced, maybe, would be – would be just an interesting suggestion for you to think about when you consider what's going on across these different geographies.
The question I had, maybe for Laurie – because I know the council, when it does important work like this, often – it has a special – a special strength or comparative advantage in answering the question, well, what does this mean for the U.S. and for U.S. policy? And I didn't see anything in there, and I just wondered: Is that the next move? What does this mean for Raj? What does this mean for the CDC? What does this mean for Obama? What does this mean for the global programs that the U.S. supports and has a major say in, like the World Bank and the Global Fund and so on? It seems a little silent on the question of so what for U.S. – Council on Foreign Relations – (laughter) – for U.S. foreign policy? So I wondered if you could comment on that.

MS. GARRETT: OK.

MR. HUANG: The U.S. is the outlier. (Chuckles.)

MS. GARRETT: Well, I mean, as usual, Bob Hecht comes in with the key question and also fascinating observation about regional shifts. I was surprised you left out Singapore, because many people think one of the most exciting sort of new health systems is Singapore and – financing model.

Q: Medical savings accounts?

MS. GARRETT: Well –

Q: I don't think – I don't think so. I think that's –

MS. GARRETT: OK. I'm just saying.

Q: – that's the past, not the future, but –

MS. GARRETT: I'm just saying.

As far as the U.S. goes, we had many ways to try and tackle the UHC question. Probably most awkward one was, as Americans, to try and talk about health coverage. If there's one thing truly wrong in the United States, it's our tremendous inequity of affordable access to health care. And so I don't – we didn't feel particularly comfortable with being in the role that the United States should be telling the rest of the world, you know, how to finance health, but also that the Global Health Initiative's whole component with the sort of brass tacks of what it imagines to be health coverage and systems work is still very, very infant stage. Ariel Pablos-Mendez didn't even get in there until about a year ago – not even a year. Is it? How many – it's – 10 months ago?

Q: August.

MS. GARRETT: August. So – and then I think the other piece that added yet another layer of awkward to the question of what do we recommend about U.S. foreign policy is that we're all realistically on the edge of our seats what's going to be left of the U.S. support for its own account 150 budget by the time the FY '13 fight is over. And it's pretty hard to go out on a limb and say, and so then we should all do this huge program around universal health coverage or something if in fact we're going to be fighting to just keep very basic aspects of U.S. global health programming funded after, you know, October 1^st or after – whenever we stop being – borrowing money to keep the lights on in Washington and actually pass a budget, which probably not be until late January 2013 or even February 2013.

MR. HUANG: Daniel.

MR. ALTMAN: I would just say, very quickly, if you can't give money, you can still give advice – (laughter) – and I think in this paper –

MR. HUANG: (Chuckling.) Really?

MR. ALTMAN: – in this paper, we're trying to highlight some of the issues that are worth considering if you're a country that's thinking about a UHC program. And we don't take a position on what U.S. policy should be, but if I had to take a guess, that – U.S. policy would at least look at some of these very same issues.

I wish we had much more space to write about the regional shifts that you're discussing and some of these other issues, but as Laurie said earlier, we decided that the best thing we could do here was take a very focused look at one chunk of the problem where we seeing some early and immediate results and try and push the dialogue in that direction.

MR. HUANG: Alex, you want to comment?

MR. PREKER: No, that's fine.

MR. HUANG: Oh.

MS. GARRETT: I think Robert –

MR. HUANG: (Chuckling.) OK. Robert, yes.

Q: Yeah. Thank you. Thank you. I just had another comment and I just wanted to first say that I think this discussion has been really useful, and I just want to thank all of you for putting in the time and putting together the reports and bringing this group of people together.

And I think some of the questions that have been raised here, particularly around, you know, does UHC work, the kind of – one of the more fundamental questions – I just wanted to call everyone's attention to the fact that in September the Lancet British medical journal is putting together a special series on universal health coverage, and it will be launched then, and I think a few of the papers in that series will begin to answer some of the questions that have been raised here. But as those papers are currently in the review process, I don't want to say too much more, but I just wanted to raise the flag and put that on everyone's radar, that that will be coming up in a few months. So stay tuned for that.

MR. HUANG: Thank you, Robert.

I guess there's no questions from – but – so I'm going to ask if there's – OK. I'm going to ask the final question, again using my presider's privilege. It's about this relationship between universal health coverage and costs of care. Because obviously the report – it was on Page 13 – made it very clear that even the evidence collected to date makes a strong case for UHC as a way to cut costs, I'm curious: What kind of costs are we talking about here? Because if you look at the countries, economies such as Taiwan and China, there seems to be no indication that the spread of the UHC program would – leads to the reduction of the total health spending, because you could have the case, like in China, right, spread of UHC – actually the drop of the share of out-of-pocket spending or actually now the share is – has – is going to – drop below 30 percent, which is actually really low. But in the meantime, you found that the total health spending continued to dramatically increase.

So that – if the salary level or income level can't catch up with the increase of total health spending, you would still end up paying in the – more out-of-pocket share , OK – no, not total out-of- – total out-of-pocket spending, I mean, in the – in terms of the actual – the dollar amount.

MR. ALTMAN: Right. So I think there are two responses that go back to things that we have alluded to. One is, if you're looking for these macroefficiencies to be captured where your country all of a sudden is spending less on health care or getting more bang for its buck in health care, it may take time. It doesn't necessarily happen right at the very beginning of the UHC program, especially since a lot of these efficiencies, we think, are going to come from preventive care, which may take decades to pay off, in some cases.

The second answer – and as – and I alluded to it in the case of Taiwan – is that utilization often goes up because the price has gone down, so your total costs end up being similar or even more. And sometimes it can go up much more quickly than you might expect. And then it's the question of whether there's moral hazard and whether you need to have some level of user fees just to keep it in check.

You know, we talked about the woman and her baby being turned away from a health clinic, potentially. You know, in the United Kingdom, which has a very well-known national health insurance system, though obviously not a perfect one, nobody gets turned away. They don't even ask you for any form of identification. They don't, however, give the best quality of health care that's available in the country. And that has some – that goes some way to controlling the moral hazard. Those other high levels of health care are available. You have to pay for them a hundred percent out of pocket or get a corollary insurance plan to the public health insurance you already have. But it allows that other option.

Now, that also introduces all sorts of new questions about equity and distribution of resources in the health sector that I'm sure Professor Bump (sp) and others would want to discuss with us. But I think that to your basic question about the overall macro level of health costs, there are those two basic responses.

MR. HUANG: Any other comments?

MR. PREKER: Well, just a quick economic response. Health care is a luxury good, and the observation we've had is that growth in health care is faster than GDP growth, which means that countries, as they get richer, are willing to – populations are willing to spend more. And that increases. So, you know, U.S. is most likely going to spend over 20 percent shortly. And there's no way of really stopping that. So the cost containment, which tends to be more in the public side – so when you put the lid on the expenditure in the public side, then it's natural people are going to spend out of pocket because if they can't get it on the public side, they're going to spend it personally because you've got a lot of – law of economics, and you've got to get the number up there somehow. So if it doesn't come from the public, it's going to come from the private.

MS. GARRETT: Well, and this in a way goes to Robert Hecht's point because we – you know, in terms of the regional variations in trends because, you know, the truth is if there's no capping of any kind, no personal limit on spending, most people will demand the absolute nirvana of health: I want to live to be 110; I want to die in my sleep having had no aches and pains before I die. I mean, who doesn't have that fantasy? But for a system to be built with that as the, you know, gold standard to be achieved universally for all citizenry and payment to somehow be available to achieve such a standard is entirely unrealistic and will bankrupt the society very quickly.

Well, I think we see now is all across Europe, where there's a great deal of experimentation going on, part of it is a realization that, A, the expectation level is too high in the population, so that not only is utilization extraordinary, but it's utilization for two weeks in a spa, you know, but also that the population is aging, so that the very expensive needs level is rising, that it's above expectations.

 

And I think it's realistic to look ahead and say, look, first of all, everybody's definition of what UHC is is going to be different. Each society is going to have its own cultural perspective, and that in many cases is going to reflect how the culture feels about health, how important is health in your culture, which kind of reminds me of a famous set of studies done by the Columbia Mailman School of Public Health back 10 years ago in the early days – 15 years ago – early days of the HIV pandemic, asking the question, why was it that uptake of HIV-related services and testing and even condom use was so poor in Harlem compared to down in Chelsea.

So you had two specific communities on the island of Manhattan, both at very high risk for HIV, absolutely diametrically opposite utilization rates for services, regardless of payment. And the answer was simply that in the Chelsea neighborhood, which was overwhelmingly white and where most of the individuals at risk were gay men, it was a community that thought health was at the top of its agenda. It was the number one issue in their lives, and therefore they really fought for every single service they could get, whereas in Harlem, most of the people surveyed said, well, let's see, health, any aspect of health, even my pregnancy and having a safe baby, is down here compared to not getting shot, paying the rent, finding money for food tomorrow, getting my welfare check cashed, et cetera, so that by the time you got to, do I have hypertension, or am I at risk for HIV, it was 15 seconds of your 24-hour agenda.

And I think that's yet another whole issue that plays into the regional variations and social variations and class variations in uptake and use of health services. We're just looking at a teeny little piece. And we hope that this has been helpful.

MR. HUANG: Thank you, Laurie. Obviously, this issue is much more complicated than we have expected – (chuckles) – that as the – this – the remarks of our speakers have indicated.

So that concludes our universal health coverage round-table series. I'd like to take this opportunity to thank our three speakers, Daniel, Laurie and Alex, for their contribution to this round-table meeting. And also, I'd like to thank the Rockefeller Foundation, especially Robert, for his crucial role in making that round-table series possible. And I'd also like to thank our research associates, and particularly Zoe Liberman – you have all received emails from her – and for her assistance in making that possible, and also for – (inaudible) – for her assistance this afternoon. And last but not least, I'd like to thank you all who participate in today's meetings for making such a lively and enjoyable discussion. And thank you. Enjoy rest of the day. (Applause.)

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THIS IS A RUSH TRANSCRIPT.

YANZHONG HUANG: Good afternoon. Welcome to the Council on Foreign Relations. I'm Yanzhong Huang, senior fellow for global health at the Council on Foreign Relations, and this is our final meeting of the new Universal Health Coverage Roundtable Series.

The meeting will discuss the council's new report, "The New Global Health Agenda: Universal Health Coverage." I said this report is officially released by the council, but the most important part and the most innovative part of the work actually was done by Dalberg, actually, led by Daniel Altman, Vicky Hausman and their teams.

So we – privileged to have three speakers for today's discussion: Laurie Garrett, Daniel Altman and Alex Preker. All three of our speakers' full bios, are included in your handouts, so I'm not going to repeat them, save to say that Daniel is director of thought leadership at Dalberg Global Development Advisors; and Laurie is senior fellow for global health at the Council on Foreign Relations and the only writer ever to have been awarded all three of the big Ps of journalism, the Peabody, the Polk and the Pulitzer, and she's also called by WHO Director General Margaret Chan as the foremost voice of global health. The third one – (chuckles) – just – not included in the handouts, but I heard what she say. The – Alex Preker – Alex is the head of Health Industry and Investment Policy at the World Bank Group.

So for time's sake, we're going to begin with brief remarks from Laurie, followed by remarks from Daniel. And after Laurie and Daniel's remarks, Alex will comment as a respondent to the report, and then we're going to open up the floor to questions and discussion. So without further ado, Laurie.

LAURIE GARRETT: Well, it's great to see you all here. Good afternoon and enjoy your lunch. And I'm sure there's more food if you feel, you know, necessary to dive out during my remarks to put another layer on your plate.

And welcome to the Council on Foreign Relations. If you've not previously been here, this is our Washington office. Headquarters, however, are in New York. In – among the global health team, one of our team members is based here in Washington, Tom Bollyky – there you are – and the rest of us are in the New York office.

For quite some time, this phrase, UHC, universal health coverage, has been tossed about. And it seemed for years that whoever was using the term had a unique definition for it so that it was very hard to get your hands around what are we talking about when we say we want universal health coverage. If you were a Western European, you probably thought it meant you want a single-payer system run by this national government universally available to everybody in your country. If you were an American, you may very well have thought, well, that's something that's going to go to the Supreme Court. (Scattered laughter.) And if you were in most of the middle- and poor-income countries of the world, you thought, what a nice idea; not ever going to really be a reality for us.

So at much prodding from the Rockefeller Foundation, to whom we're very grateful for the push to make this series of meetings and ultimate report happen, and Ariel Pablos-Mendez, who many of you probably know, who's now serving in USAID running global health programs, we tried to take this apart and deconstruct this whole concept of universal health coverage to find what's the bottom line that's a(n) actual workable target, realizing that there is a couple of trends that play into how you analyze this picture.

The first is this very substantial, dramatic increase in the size, scope and funding of global health that occurred between roughly 2000 and 2008 and is now going downhill post-financial crisis. Most of this surge was very much initiative-based, and so it was about very specific targeted health efforts. But the further we got down that path, whether it was distributing antiretrovirals or dealing with tuberculosis prevention or bed nets for malaria, whatever it might be, the more all the participants came to recognize that if you didn't have a health system in place and you didn't have systems of health financing that removed the probability, the near certainty of bankruptcy for poor households that were afflicted with a key provider having a major illness, a traffic accident or anything that would debilitate them or kill them – if you didn't get to that core, then everything else would fall apart, and you were basically setting up a giant charity construct that would be endlessly dependent.

And similarly, there has been a large body of literature going back for quite some time arguing back and forth about what is the role of the consumer or patient in their own health, and if all health is free, does it change the relationship between the provider and the consumer or patient and the commitment that the individual has to their own health protection – preventive care, diet, exercise, all of the above.

Well, there are obviously three big problems when you talk about providing health. The first is that we have a fantastic deficit of skilled health care workers globally. And this can be defined in every single category, whether you're looking at dentists, lab technicians, pharmacists, surgeons, registered nurses, health administrators, hospital administrators; in every single category we have a deficit of personnel. And the deficit is, of course, most acute in the poorest countries in the world, especially in sub-Saharan Africa, on a per capita basis. So that's your first challenge.

The second is that the delivery systems themselves are largely very weak – in some cases quite chaotic – with difficult relations between the private providing systems, or chaos, and the public providing systems, or chaos. In many countries, the relationship between the private sector of health, which is often the number one provider – or the majority of all health care is administered privately – the relationship between that private sector and the public sector is very testy, even competitive and angry, and a spirit of cooperation is not present. And in large part, it's because one sector requires a hundred percent out-of-pocket payments on the part of the health consumer while the other sector is largely publicly or fully publicly supported.

And this creates some obvious tensions for the individual as well. If you think you're going to get better care in the private sector but it'll bankrupt your family, what do you do? And then the – from the individual point of view, this question of bankruptcy is quite serious. The institute – the International Labor Organization did its own survey a few years ago looking at this question of the bankrupting impact of illness in the absence of health coverage. And their data points were quite startling. And what they were able to show was that in many societies – and I think, at this point, it is true of the United States – a major catastrophic illness can be the primary source of bankruptcy for personal and family bankruptcy. And we have not resolved this, clearly, in the U.S.

Well, I'm going to let Daniel speak to the particulars of what's uniquely discovered in this report, but the one tip-off I want to give you is – couple of things: First, when we – we thought when you look at the question of universal health coverage, it's best to focus on it as a financing question, whether it's personal economics, family economics, village economics, country economics. Coverage is about payment. And it's best to push aside as somebody else's issue to deal with whether coverage actually gets you anything. In other words, it is wholly possible for you to have some system whereby your pay – your health is paid for – you have a voucher, you have insurance, you're in a national plan, whatever it may be – but there's no health care workers when you get to that clinic, or the clinic is in shambles when you get there. So there three pieces to you to – to actually providing health care to everybody, but the one piece we're looking at is the economic financing piece.

And finally, I just couldn't help but notice that when the Dalberg group completed their analysis, they reached a key conclusion that turns out to coincide with the primary debate now inside the United States Supreme Court. It is a question of whether it is both feasible and desirable to try and build health coverage without resting it heavily on risk pooling, and that means some sort of mandate that both the well and the sick are in the same pool sharing the same burden, and that it is probably the only way to financially make it affordable for a community, a society, a country, a whole people.

And with that, I'll be happy to pass off from there. Yanzhong.

MR. HUANG: Thank you, Laurie. Actually, before the – Dan gets started, I'm – I forgot that we have some housekeeping rules to announce. This meeting is on-the-record, so you can feel free to use and quote today's discussion. But please turn off your cellphones.

And with that, Daniel.

DANIEL ALTMAN: Thank you, Laurie and Yanzhong. It's been a pleasure to work with both of you as we prepared this report. I should also thank the Rockefeller Foundation for its generous support of this work at CFR. It's a particular pleasure for me to be here presenting to you as a member of CFR. And I'd like to start by just speaking broadly about the potential benefits that we might see from universal health coverage.

There are a lot of different ways where we might find benefit in the universal health coverage program, regardless of what the exact financing structure might be. And I'm going to separate them into three. I'm going to talk a little bit about the macro-level efficiencies that you might obtain, then what improvements you might get in health outcomes, and finally, about benefits for households.

At the macro level – these are some of the benefits that get most attention, especially in this country, when we talk about universal coverage. One is – the simplest, perhaps, is if you get everybody under a single roof or the biggest roof possible, you could save a lot in administrative costs. And I remember back in '94 when I started to look at this issue, it was estimated that you could make savings of perhaps tens of billions of dollars by having a program like Medicare that covered people throughout their lives. That used to be a lot of money once upon a time.

But more importantly, I think there's an idea that if you have a universal birth-to-death health care system which has a large coverage pool, you're getting a lot of efficiencies in how care is delivered. You're correcting a lot of incentive problems that currently jack up prices and costs within the system – for example, between the various parts of a hospital and its practices and the practices that it contracts with and their billing systems and their technicians. There are a lot of incentive and holdup problems that economists have and can identify in that system.

It also helps us to coordinate care in a way that reduces waste. If the hospital and the rehabilitation center, the home health aides and the general practitioners are all connected, then we have less likelihood of wasted or ineffectual treatments.

It allows us to negotiate lower prices, as some countries have already done. With drug manufacturers, for example, France has negotiated, as an entire country health system, to get lower prices.

And finally, it can allow us to – and I will use the word ration high-cost care. When you are trying to provide health coverage for a large population, you find that you want to give the coverage where you get the most bang for the buck, and this is something that the United Kingdom has probably been a pioneering country in doing.

So there are a lot of ways where you might be able to capture efficiencies and lower the cost to an entire economy of giving decent health care to its people.

Now, just as important are what you're getting for that money, or what – the health outcomes that you're getting for that money that you pay. And it's worth talking about where those benefits could arise. It's not the focus of this report, for reasons that I'll explain later, but I think it deserves mention.

First of all, you would expect that more people would get some kind of care if there is universal coverage, and you would also expect that more people will reserve – will receive some formal medical care, what we consider advanced, technologically enabled medical care, as opposed to traditional medicine, which can be ineffective or even counterproductive. As one of my colleagues over at the Intel-Grameen social enterprise said, they're getting care now, they're just getting it from the quacks. And so to the extent that you can shift that towards formal medicine, that might have benefit.

Also, because of the coordination of care that I mentioned earlier, you tend to have fewer errors, people getting the wrong treatment, that could actually harm them, as well as being inefficient. But we also find that you're treating patients earlier. What happens in this country, for example, quite often is people wait until something is really bad and then they show up at the emergency room if they can't afford to pay for care through normal channels or if they don't have insurance. We could avoid something like that if we had universal coverage.

Finally, perhaps most importantly, there's much more incentive for preventive care. If you're paying the health costs of somebody throughout their life, you want to start early with preventive care so that those costs will be reduced over the course of their life. And these – all of these factors could help to lead to better health outcomes.

Now, in addition to the macro-efficiencies and health outcomes, we can see some possibilities for gains within the household. One which is quite important, that Laurie was alluding to earlier, is the affordability of care. It's not the case that the poor people consume a smaller percentage of their income in health care. They consume about the same percentage of their income in health care. But because their incomes are much lower, they get a lot less care. The cost – the prices of care are not proportionately lower. So to the extent that we can mitigate that, it could be a good thing. And it's especially important if you're worried about public health, because if people anywhere in your society aren't getting treated for diseases, you have problems of contagion that could arise, especially in countries that have problems with epidemics on an unfortunately somewhat regular basis.

But even more, beyond the affordability of care, just going to a doctor or getting some sort of basic treatment, there is the potential benefit of risk pooling. And this is the genius of insurance, as any economist will tell you, that you're able to pool risk with a large group so that at no time do you have to make some extraordinary outlay in order to cover your costs. This is extremely important, especially when the out-of-pocket cost of health care is high, which it is in many of the developing countries that we may talk about today.

And the final benefit, I think, that could accrue to households and is worth noting is in human capacity. An adverse health event in the household, especially of poor households, can have a lot of negative effects, not just on the person who has the health event, who might not be able to work, might not be able to be productive, but they might not be able to take care of their children, their children might therefore suffer some effects of this. There's a whole cascade of effects that can arise.

And so if you were able to somewhat – to somehow mitigate those health disasters and, in fact, as I said, disconnect them from financial disasters as well, through risk pooling, you might see knock-on effects in human capacity. And that's something that researchers really (have/haven't ?) investigated.

So these last benefits, these household benefits, are the ones we're going to focus on today, and there are a couple reasons for that. One is that the macro-efficiencies that we've spoken about have not necessarily been the biggest focus for a lot of developing countries that have delved into universal health coverage, because they haven't had much of a health system to begin with, and thus, you know, it's not as though you're moving from one very sophisticated system to another and seeing what efficiencies you might capture. You're sort of building a system from scratch, in many cases, and you're building UHC at the same time as you're building the health system itself.

And another reason why we're focusing on the household benefits is because those health outcomes are often very difficult to determine in the early years of a UHC program. And since we are in the early years in many developing countries, the evidence is scarce, though not non-existent. If some of you would like to follow up with the work of Gideon (sp) and Diaz (sp) that's cited in the paper, you can see quite a few studies that are trying to gauge the early effects, often looking at things like infant mortality, which you can gauge today rather than looking 20 years later to see how healthy somebody is. And there have been pluses and minuses. In some cases you find improvements in health outcomes; in some cases you find almost no effect. But it may be early days to gauge that.

So for all of those reasons, we chose to focus, especially in a short paper like this, on these household benefits, which should be almost immediately perceptible. If you're trying to reduce the financial burden of adverse health events in households, that should be something that we can see right away. And in fact we can. So that's what I'll be outlining the evidence on for you.

What I think is a useful bottom line here is to think about how we might create a virtuous cycle of less financial burden on households, better health, more investment in health, and then less financial burden and more investment in health going forward. You know, health is such a fundamental aspect of development, the best development economists in the world seem only to agree about health as the one sine qua non, the one thing you need to get off the ground. Even the evidence on education, which also seems so fundamental, is much more mixed. But if you can get reasonable health status for people in a poor country, they have a much better shot of turning it into a rich country. And so we want to use the tools that we have – and UHC is one of them – to perhaps set in motion this virtuous cycle of better health investment and then better health for future generations.

Well, let's talk about a few of the issues that come up when you start to consider a UHC system and how to capture some of these household benefits. One is the affordability of the program itself for households. How easy is it for them to actually opt in to the system and to use the services that might be provided to them? One issue that comes up constantly is that of user fees. And there are a lot of different ways to gauge user fees. It could be a copayment for a physician's visit; it could be some sort of deductible; it could be a percentage of costs. User fees have almost always been found to discourage people's use of care. And if the idea of universal health coverage is to increase the access of care, you have to make sure that it's within the ability and willingness of people to pay.

One tool that you can use to assure that to some degree is a cap on annual spending. You can say, OK, well, we have user fees, but only up to $50 a year, and after that everything's paid for. So these are sort of two variables that you can already tweak, or two dials that you could tweak as you're designing your UHC system.

But I think just as important as these variables are the ones that are related to risk pooling. We've seen a lot of different systems grow up around the world. Some of them were spoken about, in the first roundtable in this series, by Bill Schaue (ph), where you have different pools set up for different populations. You might see one health insurance pool for government employees and then another one set up for the private sector, or you might see one for the military and then another one for private sector. You might see them set up on village-level basis, so that each little village or cluster of villages has its own mutual insurance. We have sometimes seen the separation between people who are in formal and informal employment, so that you have some sort of employer-sponsored or -provided health insurance for those in formal employment, and then for informal employment there's a whole other system that's set up by the government.

This kind of segregation often takes you into trouble because, as Laurie pointed out, if you want to really achieve the genius of risk pooling, you need to have a big enough pool. You need to have people with different health status. And the more that you separate them by variables that may be related to their health status, such as whether they have a steady government job or they have formal employment, the less benefit you're likely to get out of risk pooling at the household level.

Another issue that comes up sometimes is enrollment. Some of these programs are mandatory. Some of them are voluntary. With the mandatory ones, sometimes even though everybody's supposed to get coverage, they have a registration process which is extremely difficult and onerous. And sometimes you have people who don't even have an official national identification number or card and it's very hard for them to actually sign up for the insurance which is their right. For the voluntary programs, we run into potential problems of adverse selection. Who are the people who are going to sign up for health insurance? You can bet that the first ones there are the ones who think they might be getting sick soon. This is something we're well familiar with in the U.S. And we've seen it happen. We've seen death spirals of insurance plans that occur as a result.

So these are all issues that need to be taken into account, not just to ensure the success of the program, but to ensure that these benefits that we talked about percolate down to the household level.

So in the paper, we have a few examples of some programs that are already in existence. We've drawn a little bit on the UHC Forward database from the joint learning program, which is referenced here. But I think what I'd like to talk about more is whether it works, whether we actually see evidence that these benefits can be accrued and what's associated with the accrual of those benefits.

Well, for affordability, definitely yes. When we have UHC programs that don't have overly onerous user fees, we definitely see access to care improving. And along with that, not surprisingly, we see utilization of care rising as well. But that can sometimes be a bit of a double-edged sword, and sometimes it occurs, to the surprise of the government organizing the program or whatever the entity is that organizes it, because of moral hazard. You lower the price of care; people get more care; they might even be a little less careful about getting sick because the consequences are not so great. This happened in Taiwan in the '90s. They got a lot more utilization than they were expecting. They had to fiddle some budgets and see how they could adjust for the future.

Another issue, though, with affordability is that the out-of-pocket cost doesn't always fall even when you set up a UHC program. And you might ask, well how could that possibly be? Well, we've run into some cases, for example in the Philippines, where the private providers that are reimbursed by the government see that the government is passing on only a small percentage of those costs to the consumer and they say, well, you can jack up the prices, basically charging the consumer the same as what they used to pay, but we're getting a bigger reimbursement from the government because the consumer only pays a small share of that. So some of these systems can be open to gaming, and that's something to look out for as well.

But overall the evidence is quite strong that the affordability is improved, the access to care is improved, and so is utilization. In terms of evidence for the benefits of risk pooling, we certainly see big drops in catastrophic spending, and that is, as I said, probably the biggest benefit that we can expect and the most desirous one at the household level. And we see those in different regions all around the world. Several examples are cited in here.

On human capacity, which was the third of these household benefits that I mentioned, we are starting to see some results. As you might expect, since it's somewhat indirect, it could take a little more time, and the scientific methods that you might use to gauge that are a little more difficult because there are a lot of things that could go into human capacity. So trying to figure out what's the delta that you get from this kind of program could be difficult. You need a randomized controlled trial or some other perhaps quasi-experimental design. Doing a rigorous paper is not the easiest thing, but we've seen a little bit.

We've seen some benefits to worker productivity, as you might expect. And I think, by the way, some of the best proof that insurance coverage can improve worker productivity is the fact that you've seen some large employers in poor countries, like Pakistan for example, setting up basically HMOs for their workers and paying the bulk of the cost because they know that they'll recoup that in terms of reduced absenteeism and higher productivity. And we've mentioned a couple of those in the report.

Also, in terms of human capacity, though, we are starting to see these effects on the next generation, that children's school enrollment, for example, in some of the Chinese rural health insurance demonstrations seems to go up, which could be because it's – they're not required to stay at home and take care of their parents when they're ill – something as simple as that. And these are the kinds of things that I hope that more economists like myself will look into because I think that they make a powerful case for the humanitarian aspects of universal health coverage.

So I'll just end by giving you a little bit of a prospectus for the future. Obviously there are many reasons to consider a UHC program. As I said, there are many different models; it's not all about single payer, as Laurie said. But there are many potential benefits that you could capture. There's not rigorous evidence supporting all of them yet, but that's partly because we're in the early stages when it comes to the developing world and UHC. But I think that the household benefits that have been documented so far make a strong case.

And when you see what the political leaders who have ushered in UHC and their countries have spoken about, it is indeed these household benefits that they say we cannot have our people burdened not just be health events, but by the catastrophic costs that come – can come with them if we hope to grow into the future. And some of the most far-sighted leaders have recognized this, and I hope that more will in the future. Thank you.

MR. HUANG: Thank you, Daniel. Actually when I was listening to your report, received this message from the Kaiser Family Foundation about recent poll data on the American attitudes toward the Affordable Health Care Act that said there was a perfect divide on the Americans' attitudes toward the act. Indeed they found that more than 50 percent of all Americans still believe that the Supreme Court should rule it's unconstitutional, the individual mandate requiring nearly everyone obtaining health insurance. So – (chuckles) – despite that the – all those – the benefits that Daniel alluded to, the – it seems that Americans still haven't realized that. (Laughs.)

MR. ALTMAN: Well, I'm not a constitutional lawyer, but this may be unconstitutional. That doesn't mean it's a bad idea. (Laughter.)

MR. HUANG: So, OK. Alex?

ALEXANDER S. PREKER: Well, thanks very much for having invited me here, Laurie and others from the – from New York, and I – it's – I'm delighted as a preliminary to my – to be here in this office. It's – congratulations to the council for having set up this new office here. So it's really nice. We'll have to come and have some of our meetings in the World Bank here.

MS. GARRETT: Yeah, that long walk two blocks away.

DR. PREKER: Exactly. So we – I'll forego the reimbursement on the taxi this time.

MS. GARRETT: (Laughs.)

DR. PREKER: So this is an immensely important topic, and it's interesting because Rob Hecht, who's here from Results for Development – he and I were working together in 1993 when the bank was doing its world health report on "Investing in Health," and one of the interesting things at that time was that we came up with some statistics that showed that although 90 percent of the disease burden in the world is in developing countries, only 10 percent of the financing is there. So there was this very big disparity between where the needs are and where the money is at the global level.

Interestingly enough, if one looks at the data now, you know, which is almost 20 years later, it's not like that. It's 60-40, which demonstrates the change that has happened in the last 20 years in terms of distribution of financing globally. So you now have the BRIC countries – if you take the BRIC – and Goldman Sachs had coined this idea – Brazil, Russia, India and China – with "S" in the – in brackets – South Africa (was ?) sort of – was supposed to be part of that – and then, once they got through that, they added "N-11," the next 11, which includes countries like Indonesia and Malaysia. But what's interesting is how have those countries now performed in terms of – in terms of this agenda? Because one could say that, well, it's the BRIC N-11 that really would have the largest capacity.

So let's look at whether or not those countries have actually been able, during that 20 years, while this shift in funding has actually taken place – you know, has there been a change in the way that the population might have access to that – that financing? So if we just look at the table now in – on page 10 for a second – and I think Daniel kind of highlighted this – but I just want to draw out a couple of observations on this table. So it's on Page 10.

So it's interesting that when one looks at places like Kenya, where the size of the pool is 7 (percent), and then out of pocket is 51 (percent). And then you go down the list – Mali is the same, 3 (percent), 52 (percent); India a bit further down, 9 (percent) and 50 (percent). So the observation is that, you know, countries that really have poor coverage or poor pools end up spending a lot of money out of pocket. And of course the troubling part is then, when you now go further along and you see a place like (Turkish ?) Republic, which is 97 percent coverage – well, it's still got 40 percent out of pocket. And if you go down further on the list there – Philippines, 80 percent coverage, but 52 (percent) – (5)4 percent out of pocket. And then you go down to the bottom, which is where we would like to see it, Colombia and Thailand where 88 percent and 72 percent for Thailand; Colombia, 88 (percent). And there you have 8 (percent) and 16 (percent).

So I think this where we now – need to now be thinking a little bit. How is it that at least two countries have succeeded in reaching the coverage level and then, at the same time, doing something about that out-of-pocket exposure that they – that the population has to health expenditure? And then other countries that, you know, one would say would – you know, they're part of the BRIC – you know, India is there; I don't see many of the other BRICS in there. Chile is not – no, China is not there.

MS. GARRETT (?): Brazil is.

DR. PREKER: Yeah, Brazil is there. So Brazil is there as well.

And these countries are actually not doing well in the distribution of the – of the funding and clearly have not succeeded in putting in place a mechanism that dealt with that out-of-pocket side of the expenditure. So that raises a couple of issues, which I think is really the crux of the matter is that, you know, there's an ideological debate about scaling up and then there's the pragmatic debate about what you do about it.

And I think this, in some ways, is also the thing that U.S. is facing right now. You've got the – you've got the ideological debate, but then you have a pragmatic debate. You know, what are the solutions and how do you actually achieve it? And that now – one of the pragmatic solutions is being challenged of course in the Supreme Court. But, you know, this was one of many options. It was not the only one, but it was one of many. And now that's being put to a test to see how consistent that is with other principles in society, and that's precisely what we find in many developing countries.

So I worked a little bit in Ghana in the early – well, 2003 to 2007. And we helped the Ghanaian government at that time put in place a scale-up program for health insurance, essentially what – at the time that we started working with the government, they had – they had inherited a British-style health system, which was basically free care, universal coverage. So going back about 45 years, that's the kind of system that they had inherited. So on the – on the surface of it, you would say, well, that's great; you know, they – I mean, they came from a background where they had full coverage, and everybody had entitlement to services.

Well, within 10 years after the colonial powers left, that system collapsed because the system didn't have enough money, and so what happened was that although you had a rule that said everybody has access to care, that rule eroded in practice, and people ended up spending money out of pocket because there wasn't enough money in the system. And then the government even came in with – initially, it was an informal kind of payment, but then the government eventually came in with a rule that said, well, if you are going to come to a public clinic, you have to pay something because, you know, our clinics are going bankrupt, so the Bamako type of thing that, you know, why shouldn't we be getting part of the money in the public sector, because we know you're paying the money anyways out of pocket, so why shouldn't the government benefit, and so we can finance part of our health service with that money out of pocket?

And so they brought in a rule that – which was called in Ghana a kind of a nice term – it's called "cash and carry." You know, you come in with your cash, and you carry away the services. So they brought in that kind of a system. And that worked OK for a while. It did help a lot, studies that were done that showed that – like in Bamako, it showed the institutions that were collecting and were allowed to retain those fees that they did collect out of pocket ended up being better staffed and ended up having at least drugs so that when people went there, they actually got treated, whereas the clinics that didn't have that, although in principle, there was free care, basically, people were getting nothing. So they got free care, but they got free care to nothing.

And I think this is what we are seeing in some of these places here. When you look at the – when you look at some of these statistics – (inaudible) – public, when 98 – 97 percent is free care, but clearly, they're getting nothing, because they are paying 40 percent out of pocket. So, you know, they are not getting what they want, so they are – they are choosing to finance.

OK, so Ghana then decided, OK, we're going to abolish the "cash and carry," and instead of that, if people are willing to pay, why don't we, instead of having people pay at the point of service, why don't we just put that money in a pool, and the – I mean, clearly, the population is willing to pay, so that's good, so let's now take advantage of the fact that the population is willing to pay, we'll put that money into a pool, and we'll make that into an insurance program so that that way, everybody contributes a little bit, because you know, the evidence is there that they are willing to pay, but instead of paying when you get sick, people will pay ahead of time, and we create a health insurance system. So that's essentially what they did. They created a health insurance system, and then they said, well, but you know, many people can't afford to make that small contribution, so we're going to subsidize the people who can't afford to pay the premium.

And what ended up happening then, of course, is that they put in place the system, and coverage went up very quickly to 70 percent. And then the thing unraveled because what was happening was all sorts of administrative things: The system wasn't able to clear the bills; they weren't able to handle the claims; they weren't able to register poor people, so even though poor people had access to the services, actually, poor people weren't getting registered, not unlike in the U.S., where you have the Medicaid patients – often there's a – you find – (inaudible) – statistic shows that many Medicaid patients actually don't register. It's either too complicated, or they don't register, or they may be illegal workers or whatever. There's a lot of reasons, but they don't get into the system.

And so we found the same thing, that, you know, even though you have the system in place, the people who really should benefit, the rules are there, but they don't come in. And so I think once again we are seeing this here in this table, and which you are highlighting in this report, that the rules by themselves aren't enough unless you couple them with some pragmatic institutions. You know, and part of it is the human resources that you were mentioning. But there are a couple other very important things. And you know, drugs and equipment are two very important elements of a – of the health system that we often forget. And when you look at the expenditure in a health service, often the big expenditure item is actually drugs plus human resources. So in many – in many emerging economies, you can have as high as 50 percent, even 60 percent of the whole health expenditure is actually on pharmaceuticals.

So once again, it means that a single thing can't solve the problem. You really have to have – it has to be an – universal coverage can't go by itself. It can't just be the front end where you're collecting the money, and then you say everybody is covered. It has to go along with institutional reforms. I think the report nicely highlights some of those institutional things that you think are important in this.

And then I just want to end on one note is that those institutions, we often think kind of in concrete terms that those institutions are things like buildings and, you know, bodies – buildings and bodies and drugs and the equipment. But I'm now beginning to work in a part of the bank which looks at how better to work with the private sector. I work in the IFC part of the bank. And I work in a part of the IFC which is called the investment climate department, where we are looking at investment policies toward the private sector and whether or not those investment policies actually encourage the private sector to, one, be functional, and second of all, to have some sort of a social benefit.

And it's really interest, a report that we have just come out of, following a survey that we did in the Africa region, which shows that many governments put in place programs that intend to mobilize resources and energy from the private sector. In fact, I think the statistic was somewhere close to 80 percent actually have rules about that. And only 6 percent actually implement them.

So one of the big challenges, I think also in the insurance side, which we find in many countries and which once again you are highlighting in this report, is that the capacity to implement really has to be there, and it goes beyond the brick-mortar, the bodies and the – and the drugs. And it includes some of the rules and regulations and how those rules and regulations are enforced, but also the culture of the population that's using those services and whether or not those populations end up behaving in a way that's consistent with the new system that's in place.

And with that, I'll just highlight a small final example that once again comes from Ghana, where you had a mother that came to a clinic with a child and was somebody that came from a background where she could have belonged to – you know, she could have belonged to the insurance scheme, or she could have been subsidized through the subsidies program. And once she got to the clinic, she didn't have coverage. And so the clinic said, well, I mean, the rules we have is that you have to have coverage, and if you don't, we can't give you care.

And so she was turned down. And this of course became a very big scandal. It became a – you know, it became a political fiasco for two reasons. One, it was a political fiasco because, you know, why should a mother with a young child be refused care? You know, so that – you know, there was a moral aspect on the treatment part. But it was also a fiasco because it was a PR fiasco because of course if she had gotten the care, you now destroy the whole health insurance system because every other mother with a child would say, well, when we get sick, we can just walk in and we're going to get care, so why should we bother paying? So it opens up the floodgates with moral hazard and noncompliance.

And I think that really demonstrates the very difficult position that governments and countries are in that are trying to do scale-up, that when you are trying to put in place things that will work, you will be forced – you – to confront that moral dilemma when the child and the mother comes to the clinic and where you have to make a judgment call. And unfortunately, of course, what often happens is that the individuals or the health care providers that are at that point of conflict, in the front line, end up making the wrong judgment calls at that point. And that of course is the big challenge that we face in many of these reforms that we're doing.

So I think this is a tremendously timely report. Congratulations on some of the insights that you have in it. And we look forward to teaming up with you and taking this agenda forward, Laurie and others. So –

MR. HUANG: Thank you, Alex.

And to the story that you shared with us on Ghana actually until very recently happened every day in China, I believe. (Chuckles.)

The – so as a presider, I have the privilege to ask the first question. This question will be about the relationship between the universal health coverage and equality. I think it is addressed in the report, although I probably didn't – in the talk, didn't allude to – but the – my question is that universal health coverage, by definition, means fairer, more efficient financing that pools risk and encourages prepayment to share health care cost equitably across the population. But the report seems to also indicate that there is no strong evidence supporting that spread of universal health coverage necessarily reduces inequality of health care access. So my question is: In what situation would universal health coverage lead to persistence, if not exacerbation, of inequality?

MR. ALTMAN: Well –

MR. HUANG: Daniel?

MR. ALTMAN: Yeah, in answering your question, Yanzhong, I'll draw on a conversation with Julio Frenk last year. He's the former minister of health in Mexico and now dean of the School of Public Health at Harvard. And we were talking about what would improve health outcomes in developing countries, and we discussed the extension of care on a broader basis. And he said it's not going to make a fundamental difference to the lives of a lot of the poorest people until the bigger issues of inequality are addressed; that it – there is a chicken-and-egg problem here in the sense that inequality can breed poor health outcomes for people at the bottom, which can then worsen their outcomes in the labor force and thus worsen inequality in the long term.

But I don't think I would start looking to universal health coverage to be a major reducer of inequality until some of the more fundamental drivers of inequality were addressed. It may have some effect on the margin, but there are such enormous other drivers at work right now – for example, just the opening of markets through globalization seems to decrease inequality between countries but increase it within countries, in many cases. You know, with that kind of wave percolating through your economy, it might be difficult to pick up the effect of UHC. But I would never underestimate the abilities of a skilled empirical economist in a randomized controlled trial.

MS. GARRETT: (Off mic.)

MR. HUANG: OK, I wonder – to both Laurie and Alex, can you respond?

MS. GARRETT: Well, I – I'd like to take Alex's bottom line, the woman in Ghana going with her child for care and being turned away. There's a number of ways that scenario could have played out, and I've personally seen it play out in every one of these ways. One is – goes to the inequality question.

I remember very well doing a series of following women who had babies in sub-Saharan African countries with high fevers. And it was fevers where it's a matter of life and death to seek appropriate care within – you have maybe a 24-, 48-hour window or the baby dies. In most cases, it was either – it was measles or malaria.

And what I saw was, these women typically lived in the rural areas, but their husbands or the fathers of these children were typically in the cities, where they had a second family and lived a completely separate life. The women could not and would not violate relations with their husbands to go straight to the nearest clinic. They would go to the city, find the husband – with the ailing baby – get his permission and then go to the clinic. So no universal health coverage access is going to save that baby's life if the inequity in the gender relations in those marriages and across whole societies is an impediment to getting the appropriate care when you need it.

But also with this example of the mother and ailing child, she may very well have had coverage and then gotten to a clinic that had no M.D. in the entire clinic, had no equipment, had no skilled personnel, or had – as we've all seen, if we've traveled widely in poor countries, had an alleged doctor, alleged medical staff, alleged equipment, and no electricity, no running water and no appropriate hygiene, so that seeking care could actually be a life-threatening event. So if all pieces are not in place, you obviously don't get to nirvana and you don't get to equity.

And then I guess the final piece of the equity question is something that we all see around the world, the difference between rural and urban, and one key piece of that is not just that health provision is very concentrated in urban areas but also that your ability to access it will depend on your personal finances because you still have to pay for transport. So even if once you get to the clinic, the care is covered, you had to get there, and that becomes the other rate-limiting step that is class-biased.

MR. ALTMAN: Yeah. Can I just add one sentence onto that, which is, a lot of people say, isn't it easier for poor people to go to the hospital than rich people, because the value of rich people's time is so much higher – you know, they – if you have a hundred-dollar-an-hour job versus a minimum wage job? No, you're looking at it backwards. The problem is that that that minimum wage means a lot more to that person than a couple of hundred-dollar-an-hour hours to a wealthy person, and it's much harder for them to take that time away in going to the clinic, even if all the pieces of the puzzle, as Laurie said, are there.

MR. HUANG: OK. Alex?

MR. PREKER: OK, so on the universal – and equality, there's a troublesome dimension to that, and that is that in higher-income countries, it makes a lot of sense. If – you know, I'm Canadian. In Canada, everybody has access to care, and that means poor people and rich people have access to care, and Canadians are rich enough so we can afford to give away care to both rich and poor people.

But the problem is, if you're living in Mali or in other very low-income countries, and you've got a hundred dollars, and you've got a hundred people, and you give $1 to each one of the hundred people, both the people who are rich and the people who are poor, then everybody's getting $1. But if you took the hundred dollars and you gave the hundred dollars to only the 20 people who are really poor, each one of those 20 people would be getting $5, and the other people would be getting – maybe spending other money, but they have the money to spend out of pocket, and therefore you'd actually be more successful in having equity by not extending universally and spreading the finances thinly across the whole population.

So I think this is where we have the tension, I think, at low-income countries between the ideology of what we think is universalist and therefore, you know, it's good for the poor, and the reality of the economics; that when you actually do that and you execute it, you're actually taking money away from the poor whenever you have a program which is universal.

MR. HUANG: Very interesting.

So we have about 35 minutes. So I want to open the floor up to questions. Please identify yourself and your affiliation before responding. Please also flip your tent card to indicate that you have a question, and we also allow one-finger rule at – if you have any quick follow-up remarks.

So I'm going to start with Jeanette.

Q: Thank you.

MR. HUANG: Oh, by the way, Jeanette is the new managing director of the Rockefeller Foundation in charge of health.

Q: Thank you. Very interesting for me, because in fact it's a discourse that I am not familiar with. In fact people that are from developing countries, in general, when we talked about universal health coverage, we basically talked about access to care, not necessarily about the financial impact. So it has been very important for me to sort of listen to the discussion. I understand that there is an issue there; that basically the implicit assumption is that if you increase coverage, financial coverage, you will increase access and then you will improve health outcomes. I would challenge that, though, and I think that we need to discuss, probably in a different forum, about that implicit assumption.

Now I'd like to make a comment – a couple of comments. The first one is the comment on universal health coverage and equity. In fact the issue there is in whatever dimension you are talking, if it is the financial dimension or the access dimension, in the road towards achieving 100 percent – let's say from 10 (percent) to 100 (percent) – not all the groups of the population benefit the same. So in fact when you begin to implement this – basically, in the road to universal, you create more inequities, unless you focus on beginning with the worst-off, which is what UNICEF in fact is doing in its newest strategy. They are basically making the case. And if you do the costing and the economic exercises, you realize that it's much more cost-effective to do it in that way.

And then the other comment – and then I just want to use Table 10 as an example, because here there are some examples. There's one example that I know very well, which is the example of Chile, because in fact I'm Chilean. And you are saying here – the tables say here that we implemented the universal health coverage in 1979. I would say that in fact we destroyed universal health coverage in 1979, because until then we had basically a system that had one pool that provided access to everyone. The depth of the package, though – of course the system regulated through waiting lists, and in 1979 what happened is that the pools were divided into two, one private – I mean, several private, 15 in fact – and one public.

And why I'm putting this example – not because I'm from Chile; I'm putting this example because it depends on your definition. I mean, if you think about the former Soviet Union countries, according to the definition of universal health coverage, they did have universal health coverage, and from one day to the other, they didn't have it. And what we are having now, it's basically the rebuilding of the universal health coverage using different instruments.

And you can argue that in fact, it was a theoretical universal health coverage because people didn't get covered. In fact, they did; the issue was that they didn't get access to services.

So what I'm trying to say is that the discussion, I think it's a bit more broader because it has to do with some historical process of reforms that I think Alex said in his intervention. And it's very interesting to continue this conversation.

MR. HUANG: Jeanette, you mention the Soviet case. This actually remind me of China. Actually, China recent – just a couple of days ago, announced it has achieved universal health coverage. (Chuckles.) So covering 100 – 1.4 – nearly 1.4 billion people, well, that is truly an achievement, right? (Chuckles.) Laurie.

MS. GARRETT: I think you raise some very important points, and they actually were all points that we debated and grappled with through this entire process – you know, trying to find a way to focus in and not end up producing another 1,000-page document that nobody reads. Well, hopefully somebody reads this. (Chuckles.)

But, first of all, yes, different countries have tried to roll out universal health coverage in different ways. And many have, in fact, done exactly what you said: target the neediest first and work your way backwards. But as Daniel pointed out, many countries, this being one of them, has rolled out universal health coverage in ways that do not reflect needs, but rather specific groupings – military or – in our country, really tying access to coverage – not care, but coverage – to site of employment so that it became part of labor negotiations beginning in the early part of the 20^th century. And companies that had organized labor tended to have good health insurance coverage, and those that didn't lacked it.

So different countries have rolled out their systems in various ways. And I think often, the one that gets the most praise is what Julio Frenk rolled out in Mexico. But I think it's also instructive – and we have some citations to follow up if there is interest – I think it's also instructive to see the struggle that Brazil is having right now, because Brazil did, in fact, roll out very aggressively for the poorest population tier and created great tension within the middle class in Brazil that they're still struggling to cope with and to figure out what is justice and equity with some payment and some nonpayment in a system as complicated and massive as the nation of Brazil.

MR. ALTMAN: Yeah. It's – I agree very strongly that these are important issues to take into account, and I think that everything you said makes sense in theory. In practice, when you deal with the logistical and political implications of rolling out a system like this, it seems like, from experience around the world, it's easier to roll out a system to everyone and then start layering on the services rather than to start with a lot of services for a small group and then start layering on other populations for partly the same reasons that Laurie was referring to. But I would also point out that if you just start out providing care to the poorest, you're losing a lot of the potential benefit of risk pooling because you're targeting a population that's the sickest in society.

MR. HUANG: Alex, you have a –

MS. GARRETT: Add anything to –

MR. PREKER: No.

MR. HUANG: OK. Irena (ph)?

Q: Thank you so much for such a great panel, first of all.

I have a question related to a presentation, two months ago, of Georgian President Mikheil Saakashvili at the World Bank. And in his speech, he spoke about achievements in Georgia. And one of the achievements was hospitals all around the country. He calls these hospital like five-star hotels. And these hospitals are available for everyone.

And in this context, I would like to ask this distinguished panel and especially Alex how it was made by coverage, how you see this model, because Georgia is not a rich country; probably it's a(n) emerging economy; maybe we can call it from poor-to middle-income country. And do you think this kind of model could work for other countries like this kind – this type of countries?

And the other question is about equality, because even President Saakashvili stressed that all people, rural people, poorer people could come to this hospital. They are – have modern equipment. But anyway, they are not equal. I'm – but he said, for example, once in their life they could be – could have appropriate service – and how it's related to question of equality.

And following – so Canada is famous for its health coverage. Why other countries, for example, United States, cannot follow this example in health coverage?

MS. GARRETT: I'll take the latter, you take the former. (Laughter.)

MR. PREKER: OK. Yes, then I don't have to defend the Canadian system. (Laughter.)

Well, I think Georgia is quite typical of what happened in the – you know, the states that were part of the former Soviet Union after the collapse of the – of the former Soviet Union. I've been to Georgia several times, and – so I know exactly what you're talking about. The problem was that very shortly after the transition, the bank – the government in Georgia basically went bankrupt. It had a compression of economic growth, of – I think it was, like, 70 percent. It was one of the most hard-hit of the Eastern European countries in terms of – in terms of collapse of the economy.

And so essentially the government was bankrupt, which meant that they had a very large stock of facilities, hospitals and also doctors that were on the payroll, because everybody was a civil servant on the payroll, or at least a government employee, and no money. And so people were not – basically, the salary bill stopped, people would no longer get paid, and there was no drugs in the hospital. I remember the last time I visited, which was I guess now close to 10 years ago, but at that time, you know, I had to walk up seven stairs because, you know, there was no light, there was no electricity. It was – basically, the service had collapsed.

So in a context like that, you know, if you have one functioning hospital that actually is functioning, I mean, there is a need for tertiary care in Georgia like there's – anybody – anywhere else in the world. I mean, this is a country – it has a lot of chronic disease and a lot of acute disease that need to be dealt with. And, you know, you can die in the street or you can die in the hospital.

But the issue, I think, that Georgia faces with this kind of a situation was – it's the same as we face in many other parts of the world – is if that hospital, now is functioning, was reserved and could be used only for the acute care that it was built for and not be giving primary care and stuff that could be given in clinics, then you might end up having something that actually works. But the problem is, because the rest of the health services collapsed, if you have one institution that has been made functional and you have the rest of the service that's collapsed, even in Georgia, this is never going to work, because you can't have 6 million or whatever it is that your population is – you can't have 6 million people coming to one place and getting care for primary care. It just – it's just not going to work.

This institution will collapse unless, you know, it's – unless that institution sits on top of a – the pyramid of a large health service. So I think this is a – and it's a difficult dilemma many countries face, is because you like to have one place which provides decent care, but you're not going to – 6 million people are not going to be able to get care from that one place.

MS. GARRETT: When I – 14 years ago, I traveled the – all over Georgia looking at their health system. And I think that the Georgia example is actually an interesting one that – for you to have raised because the advantage that Georgia today has is that the vast majority of the society truly rejected the Soviet model of health, and what they were left with was something so horrible – I mean, some of the worst atrocities I've ever seen in health care delivery, I saw back then in Georgia – you know, physicians with no gloves performing surgery, not able to scrub beforehand because there was no soap. So there – in a sense, they have an advantage now in that the – there was very little support for keeping what had existed and great possibility of coming in with a clean slate and trying to do the right thing. And similarly, Canada built its health system long ago on a clean slate.

The United States has built incrementally hundreds of different health systems so thoroughly fragmented, each with its own interest groups dependent on its continued existence, that trying to create a single or even a workable financing mechanism is impossible in America. The best we can hope for is to make these fragmentary pieces work together a little bit better, be a bit better regulated so that they can't price gouge various elements of funding, and create better equity and pooling for the largest elements of the system. And that's what the health reform act tried to do. But, as you can see, there are many interests that seek – see that they will lose if that is fully implemented and therefore are very actively fighting against it.

MR. HUANG: That's exactly what Debbie Fuentes (ph) said: just 90 percent politics, 10 percent technical-institutional details. (Laughs.)

Let's see whether we have any questions from the participants – from the teleconference participants. Anybody?

MS. GARRETT: On the phone.

MR. HUANG: On the phone?

OK – (laughs) – nobody. So Ben (ph).

Q: Bart Szewczyk (ph), Wilmer Hale and G.W. law school. Thank you very much for all of your presentations. I wanted to ask, is there any empirical evidence between the degree of universal health coverage and long-term economic growth? I guess those studies would be probably difficult to do, but is there any evidence one way or the other?

MR. ALTMAN: Short answer is no. If you're referring to sort of cross-sectional-type of analysis, that would be very difficult because the universal health coverage systems are so different that to throw in a single dummy variable for them would not give you a very good regression. So not putting it into technical terms, I think that would be very tough to do, to look at countries in comparison to each other and see whether there was an effect on growth. If you looked within one country, you'd have a better shot of finding an outcome.

And there have been some studies even in the United States looking at Medicare. It's not completely universal, but it's universal for part of the population. And the idea was to take the burden of caring for the older generation away from people who could be otherwise productive in the workforce, in addition to all the other benefits that it might have. And you know, I think that there's some evidence to support positive effects, but spotty and not necessarily so generalizable across contexts that I would want to take it from one country and apply it to another.

MR. HUANG: Comments?

DR. PREKER: Yeah, I mean, there's been – recently, there's been the commission of growth – health and growth. So if you want to look at what they did, you – it's worthwhile just Googling that.

I mean, there's basically two problems. One is that we haven't agreed on what universal coverage is, and so it's hard to do regressions against something you haven't defined yet. And so it's not an easy thing to draw the correlation.

But there's a reverse correlation, and that is that countries that tend to go through rapid growth tend to become more inequitable during the growth phase (till you get ?) industrialization process. And during that inequity period, you tend to have health care becoming less equitable, like you saw in Georgia and other countries in Eastern Europe. So one has to be careful about the cause and effect there. But certainly if one looks at the world where you have rapid growth and economic growth, like China, those places – those places have become much more inequitable in health care. I don't think it's the health care that led to the growth, because you would then say, well, inequitable health care leads to growth. No, I think that's not the way it is. But I think you can expect to see inequity in health care appear when you have rapid population growth in some areas and where part of the population ends up having purchasing power, which means that they can buy care that the general population can't afford.

MS. GARRETT: Can I follow up?

Alex, I want to ask you about something. The – one of the things we've seen in the most rapidly expanding economies in the late 20^th or early 21^st centuries. If you look at China, if you look at post-Soviet Russia, you look at – less so at Brazil, and certainly in India, you see that as these economies explode, the public sector salaries for those that are not engaged in highly corruption-prone sectors do not keep pace with growth in the private sector. So there's the envy-of-your-neighbor problem, and that seems to compel, in a way, an increase in corruption in direct health provision so that – for example, I saw myself in China, a doctor will say to a patient, here's what – here's the free syringe; I can now give you an injection with it; it's been used before. (Laughter.) Here's the one that's still in its packaging, but that'll cost you $50. Do you want me to inject you with this one or this one? And that $50 is going to the doctor. So is there a way to have this economic growth without also enhancing not only the lack of equity, but also corruption within the health sector?

DR. PREKER: All right, I don't have the answer to that. I mean, we know empirically that countries that go through a very rapid growth period, you have social consequences. And so it's one of the things that is there. And you know, when you (saw ?) – the definition of emerging markets by Goldman Sachs is it's growth in the double digits with large populations and where you have population dynamics that's moving towards aging. So that's the – you know, that's the definition of an emerging economy, and I think in most of the emerging economy, you've had – you've had problems in the health side. So they go through a phase and then, you know – then eventually, when you have a sufficient middle class that ends up with political power, then that middle class starts demanding social services that are reasonable for the middle class. And that's what you're basically seeing now in both China and India. You have the growth phase, and now you have a middle class that's beginning to say, we're not happy with this anymore; we're – you know, we want change. And so (there's ?) this change happening in both China and in India.

MR. ALTMAN: (But ?) that creates an additional causality problem because it's the income growth that's leading to the health coverage, not vice versa. (Laughter.)

DR. PREKER (?): Yeah.

MR. HUANG: OK. Jesse?

Q: Thanks. All right, Jesse Bump, Georgetown University. I just wanted to point out there's a tension between what we in the global health community think about as universal health coverage, which tends to be focused on equity and focused on the poorest and largely I think that comes from the mindset that that's the missing piece in existing health systems. But, as we move into the sub-Saharan and other areas where there really aren't very many systems themselves, I wanted to point out that in the health systems I've studied, none of them have come from the poor. They're all built around a paying customer at the beginning. And as Daniel said, this amounts to a rationing question, and rationing means it's an ethical issue that then has to get solved at the implementation stage around the history, politics, and economics of a particular population. Thanks.

MR. HUANG: Comments?

MS. GARRETT: Absolutely.

MR. HUANG: (Laughs.) OK, fully agree. Robert?

Q: Is that working? OK. Robert Hecht from Results for Development. This looks like a great report, and I'll read it – read it carefully.

It seems to me if you look at what's going on around the world and try to understand the trends in health systems, health financing, access to care that Jeanette was talking about, financial protection, both of those dimensions, there – there's a lot of common language around universal coverage and there is some commonalities. But in my own observation, I think there are a lot of submovements within geographies and things are happening at different speeds and different ways, and I wonder if you've been thinking about that and would – will be bringing it out in some of your future work.

In my casual look at things, it seems like there are lot of what I would call second-generation changes in health financing arrangements and coverage in some of the middle-income regions: Latin America, which already has a long history going back to the '60s, '70s, '80s; Eastern Europe – some of the Eastern European countries that made dramatic moves in the '90s and are now – they're burnishing their systems and making some gradual changes; Korea, which has recently merged many of its risk pools into a single one; Turkey – there are – there are – there are some trends going on that I would call second-generation type ones.

In the OECD countries, we see this as – it's a – it's a – it's a never-ending process, so there are third- and fourth- – very interesting things going on in the Netherlands and in the U.K., and the NHS is constantly being reconfigured and reformulated.

So the notion that there's not a single ending point but there's a constant evolution and that individual countries and groups of countries are moving at different speeds, I think, is worth reflecting on.

In my own opinion, Africa is really at a stage of early experimentation and nothing more than that. There's a lot of hype right now, but – and there are some interesting things going on in places like Ghana and Rwanda and smaller-scale things in Nigeria and Kenya and places like that. But it's early experimentation, I would say.

I think that the part of the world which is most exciting right now is East Asia and maybe India added because there, with rapid economic growth, all the political and economic underpinnings are there for quantum changes within these systems, and that's what we're seeing in China right now. India is thinking very – in very big terms, and it feels – is feeling its oats or whatever you call it, and wants to make some dramatic moves, is watching what China's doing. And places like Vietnam and Indonesia and so on you see, again, attempts to really complete somewhat fragmented systems.

So trying to get a little more nuanced, maybe, would be – would be just an interesting suggestion for you to think about when you consider what's going on across these different geographies.
The question I had, maybe for Laurie – because I know the council, when it does important work like this, often – it has a special – a special strength or comparative advantage in answering the question, well, what does this mean for the U.S. and for U.S. policy? And I didn't see anything in there, and I just wondered: Is that the next move? What does this mean for Raj? What does this mean for the CDC? What does this mean for Obama? What does this mean for the global programs that the U.S. supports and has a major say in, like the World Bank and the Global Fund and so on? It seems a little silent on the question of so what for U.S. – Council on Foreign Relations – (laughter) – for U.S. foreign policy? So I wondered if you could comment on that.

MS. GARRETT: OK.

MR. HUANG: The U.S. is the outlier. (Chuckles.)

MS. GARRETT: Well, I mean, as usual, Bob Hecht comes in with the key question and also fascinating observation about regional shifts. I was surprised you left out Singapore, because many people think one of the most exciting sort of new health systems is Singapore and – financing model.

Q: Medical savings accounts?

MS. GARRETT: Well –

Q: I don't think – I don't think so. I think that's –

MS. GARRETT: OK. I'm just saying.

Q: – that's the past, not the future, but –

MS. GARRETT: I'm just saying.

As far as the U.S. goes, we had many ways to try and tackle the UHC question. Probably most awkward one was, as Americans, to try and talk about health coverage. If there's one thing truly wrong in the United States, it's our tremendous inequity of affordable access to health care. And so I don't – we didn't feel particularly comfortable with being in the role that the United States should be telling the rest of the world, you know, how to finance health, but also that the Global Health Initiative's whole component with the sort of brass tacks of what it imagines to be health coverage and systems work is still very, very infant stage. Ariel Pablos-Mendez didn't even get in there until about a year ago – not even a year. Is it? How many – it's – 10 months ago?

Q: August.

MS. GARRETT: August. So – and then I think the other piece that added yet another layer of awkward to the question of what do we recommend about U.S. foreign policy is that we're all realistically on the edge of our seats what's going to be left of the U.S. support for its own account 150 budget by the time the FY '13 fight is over. And it's pretty hard to go out on a limb and say, and so then we should all do this huge program around universal health coverage or something if in fact we're going to be fighting to just keep very basic aspects of U.S. global health programming funded after, you know, October 1^st or after – whenever we stop being – borrowing money to keep the lights on in Washington and actually pass a budget, which probably not be until late January 2013 or even February 2013.

MR. HUANG: Daniel.

MR. ALTMAN: I would just say, very quickly, if you can't give money, you can still give advice – (laughter) – and I think in this paper –

MR. HUANG: (Chuckling.) Really?

MR. ALTMAN: – in this paper, we're trying to highlight some of the issues that are worth considering if you're a country that's thinking about a UHC program. And we don't take a position on what U.S. policy should be, but if I had to take a guess, that – U.S. policy would at least look at some of these very same issues.

I wish we had much more space to write about the regional shifts that you're discussing and some of these other issues, but as Laurie said earlier, we decided that the best thing we could do here was take a very focused look at one chunk of the problem where we seeing some early and immediate results and try and push the dialogue in that direction.

MR. HUANG: Alex, you want to comment?

MR. PREKER: No, that's fine.

MR. HUANG: Oh.

MS. GARRETT: I think Robert –

MR. HUANG: (Chuckling.) OK. Robert, yes.

Q: Yeah. Thank you. Thank you. I just had another comment and I just wanted to first say that I think this discussion has been really useful, and I just want to thank all of you for putting in the time and putting together the reports and bringing this group of people together.

And I think some of the questions that have been raised here, particularly around, you know, does UHC work, the kind of – one of the more fundamental questions – I just wanted to call everyone's attention to the fact that in September the Lancet British medical journal is putting together a special series on universal health coverage, and it will be launched then, and I think a few of the papers in that series will begin to answer some of the questions that have been raised here. But as those papers are currently in the review process, I don't want to say too much more, but I just wanted to raise the flag and put that on everyone's radar, that that will be coming up in a few months. So stay tuned for that.

MR. HUANG: Thank you, Robert.

I guess there's no questions from – but – so I'm going to ask if there's – OK. I'm going to ask the final question, again using my presider's privilege. It's about this relationship between universal health coverage and costs of care. Because obviously the report – it was on Page 13 – made it very clear that even the evidence collected to date makes a strong case for UHC as a way to cut costs, I'm curious: What kind of costs are we talking about here? Because if you look at the countries, economies such as Taiwan and China, there seems to be no indication that the spread of the UHC program would – leads to the reduction of the total health spending, because you could have the case, like in China, right, spread of UHC – actually the drop of the share of out-of-pocket spending or actually now the share is – has – is going to – drop below 30 percent, which is actually really low. But in the meantime, you found that the total health spending continued to dramatically increase.

So that – if the salary level or income level can't catch up with the increase of total health spending, you would still end up paying in the – more out-of-pocket share , OK – no, not total out-of- – total out-of-pocket spending, I mean, in the – in terms of the actual – the dollar amount.

MR. ALTMAN: Right. So I think there are two responses that go back to things that we have alluded to. One is, if you're looking for these macroefficiencies to be captured where your country all of a sudden is spending less on health care or getting more bang for its buck in health care, it may take time. It doesn't necessarily happen right at the very beginning of the UHC program, especially since a lot of these efficiencies, we think, are going to come from preventive care, which may take decades to pay off, in some cases.

The second answer – and as – and I alluded to it in the case of Taiwan – is that utilization often goes up because the price has gone down, so your total costs end up being similar or even more. And sometimes it can go up much more quickly than you might expect. And then it's the question of whether there's moral hazard and whether you need to have some level of user fees just to keep it in check.

You know, we talked about the woman and her baby being turned away from a health clinic, potentially. You know, in the United Kingdom, which has a very well-known national health insurance system, though obviously not a perfect one, nobody gets turned away. They don't even ask you for any form of identification. They don't, however, give the best quality of health care that's available in the country. And that has some – that goes some way to controlling the moral hazard. Those other high levels of health care are available. You have to pay for them a hundred percent out of pocket or get a corollary insurance plan to the public health insurance you already have. But it allows that other option.

Now, that also introduces all sorts of new questions about equity and distribution of resources in the health sector that I'm sure Professor Bump (sp) and others would want to discuss with us. But I think that to your basic question about the overall macro level of health costs, there are those two basic responses.

MR. HUANG: Any other comments?

MR. PREKER: Well, just a quick economic response. Health care is a luxury good, and the observation we've had is that growth in health care is faster than GDP growth, which means that countries, as they get richer, are willing to – populations are willing to spend more. And that increases. So, you know, U.S. is most likely going to spend over 20 percent shortly. And there's no way of really stopping that. So the cost containment, which tends to be more in the public side – so when you put the lid on the expenditure in the public side, then it's natural people are going to spend out of pocket because if they can't get it on the public side, they're going to spend it personally because you've got a lot of – law of economics, and you've got to get the number up there somehow. So if it doesn't come from the public, it's going to come from the private.

MS. GARRETT: Well, and this in a way goes to Robert Hecht's point because we – you know, in terms of the regional variations in trends because, you know, the truth is if there's no capping of any kind, no personal limit on spending, most people will demand the absolute nirvana of health: I want to live to be 110; I want to die in my sleep having had no aches and pains before I die. I mean, who doesn't have that fantasy? But for a system to be built with that as the, you know, gold standard to be achieved universally for all citizenry and payment to somehow be available to achieve such a standard is entirely unrealistic and will bankrupt the society very quickly.

Well, I think we see now is all across Europe, where there's a great deal of experimentation going on, part of it is a realization that, A, the expectation level is too high in the population, so that not only is utilization extraordinary, but it's utilization for two weeks in a spa, you know, but also that the population is aging, so that the very expensive needs level is rising, that it's above expectations.

 

And I think it's realistic to look ahead and say, look, first of all, everybody's definition of what UHC is is going to be different. Each society is going to have its own cultural perspective, and that in many cases is going to reflect how the culture feels about health, how important is health in your culture, which kind of reminds me of a famous set of studies done by the Columbia Mailman School of Public Health back 10 years ago in the early days – 15 years ago – early days of the HIV pandemic, asking the question, why was it that uptake of HIV-related services and testing and even condom use was so poor in Harlem compared to down in Chelsea.

So you had two specific communities on the island of Manhattan, both at very high risk for HIV, absolutely diametrically opposite utilization rates for services, regardless of payment. And the answer was simply that in the Chelsea neighborhood, which was overwhelmingly white and where most of the individuals at risk were gay men, it was a community that thought health was at the top of its agenda. It was the number one issue in their lives, and therefore they really fought for every single service they could get, whereas in Harlem, most of the people surveyed said, well, let's see, health, any aspect of health, even my pregnancy and having a safe baby, is down here compared to not getting shot, paying the rent, finding money for food tomorrow, getting my welfare check cashed, et cetera, so that by the time you got to, do I have hypertension, or am I at risk for HIV, it was 15 seconds of your 24-hour agenda.

And I think that's yet another whole issue that plays into the regional variations and social variations and class variations in uptake and use of health services. We're just looking at a teeny little piece. And we hope that this has been helpful.

MR. HUANG: Thank you, Laurie. Obviously, this issue is much more complicated than we have expected – (chuckles) – that as the – this – the remarks of our speakers have indicated.

So that concludes our universal health coverage round-table series. I'd like to take this opportunity to thank our three speakers, Daniel, Laurie and Alex, for their contribution to this round-table meeting. And also, I'd like to thank the Rockefeller Foundation, especially Robert, for his crucial role in making that round-table series possible. And I'd also like to thank our research associates, and particularly Zoe Liberman – you have all received emails from her – and for her assistance in making that possible, and also for – (inaudible) – for her assistance this afternoon. And last but not least, I'd like to thank you all who participate in today's meetings for making such a lively and enjoyable discussion. And thank you. Enjoy rest of the day. (Applause.)

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THIS IS A RUSH TRANSCRIPT.

YANZHONG HUANG: Good afternoon. Welcome to the Council on Foreign Relations. I'm Yanzhong Huang, senior fellow for global health at the Council on Foreign Relations, and this is our final meeting of the new Universal Health Coverage Roundtable Series.

The meeting will discuss the council's new report, "The New Global Health Agenda: Universal Health Coverage." I said this report is officially released by the council, but the most important part and the most innovative part of the work actually was done by Dalberg, actually, led by Daniel Altman, Vicky Hausman and their teams.

So we – privileged to have three speakers for today's discussion: Laurie Garrett, Daniel Altman and Alex Preker. All three of our speakers' full bios, are included in your handouts, so I'm not going to repeat them, save to say that Daniel is director of thought leadership at Dalberg Global Development Advisors; and Laurie is senior fellow for global health at the Council on Foreign Relations and the only writer ever to have been awarded all three of the big Ps of journalism, the Peabody, the Polk and the Pulitzer, and she's also called by WHO Director General Margaret Chan as the foremost voice of global health. The third one – (chuckles) – just – not included in the handouts, but I heard what she say. The – Alex Preker – Alex is the head of Health Industry and Investment Policy at the World Bank Group.

So for time's sake, we're going to begin with brief remarks from Laurie, followed by remarks from Daniel. And after Laurie and Daniel's remarks, Alex will comment as a respondent to the report, and then we're going to open up the floor to questions and discussion. So without further ado, Laurie.

LAURIE GARRETT: Well, it's great to see you all here. Good afternoon and enjoy your lunch. And I'm sure there's more food if you feel, you know, necessary to dive out during my remarks to put another layer on your plate.

And welcome to the Council on Foreign Relations. If you've not previously been here, this is our Washington office. Headquarters, however, are in New York. In – among the global health team, one of our team members is based here in Washington, Tom Bollyky – there you are – and the rest of us are in the New York office.

For quite some time, this phrase, UHC, universal health coverage, has been tossed about. And it seemed for years that whoever was using the term had a unique definition for it so that it was very hard to get your hands around what are we talking about when we say we want universal health coverage. If you were a Western European, you probably thought it meant you want a single-payer system run by this national government universally available to everybody in your country. If you were an American, you may very well have thought, well, that's something that's going to go to the Supreme Court. (Scattered laughter.) And if you were in most of the middle- and poor-income countries of the world, you thought, what a nice idea; not ever going to really be a reality for us.

So at much prodding from the Rockefeller Foundation, to whom we're very grateful for the push to make this series of meetings and ultimate report happen, and Ariel Pablos-Mendez, who many of you probably know, who's now serving in USAID running global health programs, we tried to take this apart and deconstruct this whole concept of universal health coverage to find what's the bottom line that's a(n) actual workable target, realizing that there is a couple of trends that play into how you analyze this picture.

The first is this very substantial, dramatic increase in the size, scope and funding of global health that occurred between roughly 2000 and 2008 and is now going downhill post-financial crisis. Most of this surge was very much initiative-based, and so it was about very specific targeted health efforts. But the further we got down that path, whether it was distributing antiretrovirals or dealing with tuberculosis prevention or bed nets for malaria, whatever it might be, the more all the participants came to recognize that if you didn't have a health system in place and you didn't have systems of health financing that removed the probability, the near certainty of bankruptcy for poor households that were afflicted with a key provider having a major illness, a traffic accident or anything that would debilitate them or kill them – if you didn't get to that core, then everything else would fall apart, and you were basically setting up a giant charity construct that would be endlessly dependent.

And similarly, there has been a large body of literature going back for quite some time arguing back and forth about what is the role of the consumer or patient in their own health, and if all health is free, does it change the relationship between the provider and the consumer or patient and the commitment that the individual has to their own health protection – preventive care, diet, exercise, all of the above.

Well, there are obviously three big problems when you talk about providing health. The first is that we have a fantastic deficit of skilled health care workers globally. And this can be defined in every single category, whether you're looking at dentists, lab technicians, pharmacists, surgeons, registered nurses, health administrators, hospital administrators; in every single category we have a deficit of personnel. And the deficit is, of course, most acute in the poorest countries in the world, especially in sub-Saharan Africa, on a per capita basis. So that's your first challenge.

The second is that the delivery systems themselves are largely very weak – in some cases quite chaotic – with difficult relations between the private providing systems, or chaos, and the public providing systems, or chaos. In many countries, the relationship between the private sector of health, which is often the number one provider – or the majority of all health care is administered privately – the relationship between that private sector and the public sector is very testy, even competitive and angry, and a spirit of cooperation is not present. And in large part, it's because one sector requires a hundred percent out-of-pocket payments on the part of the health consumer while the other sector is largely publicly or fully publicly supported.

And this creates some obvious tensions for the individual as well. If you think you're going to get better care in the private sector but it'll bankrupt your family, what do you do? And then the – from the individual point of view, this question of bankruptcy is quite serious. The institute – the International Labor Organization did its own survey a few years ago looking at this question of the bankrupting impact of illness in the absence of health coverage. And their data points were quite startling. And what they were able to show was that in many societies – and I think, at this point, it is true of the United States – a major catastrophic illness can be the primary source of bankruptcy for personal and family bankruptcy. And we have not resolved this, clearly, in the U.S.

Well, I'm going to let Daniel speak to the particulars of what's uniquely discovered in this report, but the one tip-off I want to give you is – couple of things: First, when we – we thought when you look at the question of universal health coverage, it's best to focus on it as a financing question, whether it's personal economics, family economics, village economics, country economics. Coverage is about payment. And it's best to push aside as somebody else's issue to deal with whether coverage actually gets you anything. In other words, it is wholly possible for you to have some system whereby your pay – your health is paid for – you have a voucher, you have insurance, you're in a national plan, whatever it may be – but there's no health care workers when you get to that clinic, or the clinic is in shambles when you get there. So there three pieces to you to – to actually providing health care to everybody, but the one piece we're looking at is the economic financing piece.

And finally, I just couldn't help but notice that when the Dalberg group completed their analysis, they reached a key conclusion that turns out to coincide with the primary debate now inside the United States Supreme Court. It is a question of whether it is both feasible and desirable to try and build health coverage without resting it heavily on risk pooling, and that means some sort of mandate that both the well and the sick are in the same pool sharing the same burden, and that it is probably the only way to financially make it affordable for a community, a society, a country, a whole people.

And with that, I'll be happy to pass off from there. Yanzhong.

MR. HUANG: Thank you, Laurie. Actually, before the – Dan gets started, I'm – I forgot that we have some housekeeping rules to announce. This meeting is on-the-record, so you can feel free to use and quote today's discussion. But please turn off your cellphones.

And with that, Daniel.

DANIEL ALTMAN: Thank you, Laurie and Yanzhong. It's been a pleasure to work with both of you as we prepared this report. I should also thank the Rockefeller Foundation for its generous support of this work at CFR. It's a particular pleasure for me to be here presenting to you as a member of CFR. And I'd like to start by just speaking broadly about the potential benefits that we might see from universal health coverage.

There are a lot of different ways where we might find benefit in the universal health coverage program, regardless of what the exact financing structure might be. And I'm going to separate them into three. I'm going to talk a little bit about the macro-level efficiencies that you might obtain, then what improvements you might get in health outcomes, and finally, about benefits for households.

At the macro level – these are some of the benefits that get most attention, especially in this country, when we talk about universal coverage. One is – the simplest, perhaps, is if you get everybody under a single roof or the biggest roof possible, you could save a lot in administrative costs. And I remember back in '94 when I started to look at this issue, it was estimated that you could make savings of perhaps tens of billions of dollars by having a program like Medicare that covered people throughout their lives. That used to be a lot of money once upon a time.

But more importantly, I think there's an idea that if you have a universal birth-to-death health care system which has a large coverage pool, you're getting a lot of efficiencies in how care is delivered. You're correcting a lot of incentive problems that currently jack up prices and costs within the system – for example, between the various parts of a hospital and its practices and the practices that it contracts with and their billing systems and their technicians. There are a lot of incentive and holdup problems that economists have and can identify in that system.

It also helps us to coordinate care in a way that reduces waste. If the hospital and the rehabilitation center, the home health aides and the general practitioners are all connected, then we have less likelihood of wasted or ineffectual treatments.

It allows us to negotiate lower prices, as some countries have already done. With drug manufacturers, for example, France has negotiated, as an entire country health system, to get lower prices.

And finally, it can allow us to – and I will use the word ration high-cost care. When you are trying to provide health coverage for a large population, you find that you want to give the coverage where you get the most bang for the buck, and this is something that the United Kingdom has probably been a pioneering country in doing.

So there are a lot of ways where you might be able to capture efficiencies and lower the cost to an entire economy of giving decent health care to its people.

Now, just as important are what you're getting for that money, or what – the health outcomes that you're getting for that money that you pay. And it's worth talking about where those benefits could arise. It's not the focus of this report, for reasons that I'll explain later, but I think it deserves mention.

First of all, you would expect that more people would get some kind of care if there is universal coverage, and you would also expect that more people will reserve – will receive some formal medical care, what we consider advanced, technologically enabled medical care, as opposed to traditional medicine, which can be ineffective or even counterproductive. As one of my colleagues over at the Intel-Grameen social enterprise said, they're getting care now, they're just getting it from the quacks. And so to the extent that you can shift that towards formal medicine, that might have benefit.

Also, because of the coordination of care that I mentioned earlier, you tend to have fewer errors, people getting the wrong treatment, that could actually harm them, as well as being inefficient. But we also find that you're treating patients earlier. What happens in this country, for example, quite often is people wait until something is really bad and then they show up at the emergency room if they can't afford to pay for care through normal channels or if they don't have insurance. We could avoid something like that if we had universal coverage.

Finally, perhaps most importantly, there's much more incentive for preventive care. If you're paying the health costs of somebody throughout their life, you want to start early with preventive care so that those costs will be reduced over the course of their life. And these – all of these factors could help to lead to better health outcomes.

Now, in addition to the macro-efficiencies and health outcomes, we can see some possibilities for gains within the household. One which is quite important, that Laurie was alluding to earlier, is the affordability of care. It's not the case that the poor people consume a smaller percentage of their income in health care. They consume about the same percentage of their income in health care. But because their incomes are much lower, they get a lot less care. The cost – the prices of care are not proportionately lower. So to the extent that we can mitigate that, it could be a good thing. And it's especially important if you're worried about public health, because if people anywhere in your society aren't getting treated for diseases, you have problems of contagion that could arise, especially in countries that have problems with epidemics on an unfortunately somewhat regular basis.

But even more, beyond the affordability of care, just going to a doctor or getting some sort of basic treatment, there is the potential benefit of risk pooling. And this is the genius of insurance, as any economist will tell you, that you're able to pool risk with a large group so that at no time do you have to make some extraordinary outlay in order to cover your costs. This is extremely important, especially when the out-of-pocket cost of health care is high, which it is in many of the developing countries that we may talk about today.

And the final benefit, I think, that could accrue to households and is worth noting is in human capacity. An adverse health event in the household, especially of poor households, can have a lot of negative effects, not just on the person who has the health event, who might not be able to work, might not be able to be productive, but they might not be able to take care of their children, their children might therefore suffer some effects of this. There's a whole cascade of effects that can arise.

And so if you were able to somewhat – to somehow mitigate those health disasters and, in fact, as I said, disconnect them from financial disasters as well, through risk pooling, you might see knock-on effects in human capacity. And that's something that researchers really (have/haven't ?) investigated.

So these last benefits, these household benefits, are the ones we're going to focus on today, and there are a couple reasons for that. One is that the macro-efficiencies that we've spoken about have not necessarily been the biggest focus for a lot of developing countries that have delved into universal health coverage, because they haven't had much of a health system to begin with, and thus, you know, it's not as though you're moving from one very sophisticated system to another and seeing what efficiencies you might capture. You're sort of building a system from scratch, in many cases, and you're building UHC at the same time as you're building the health system itself.

And another reason why we're focusing on the household benefits is because those health outcomes are often very difficult to determine in the early years of a UHC program. And since we are in the early years in many developing countries, the evidence is scarce, though not non-existent. If some of you would like to follow up with the work of Gideon (sp) and Diaz (sp) that's cited in the paper, you can see quite a few studies that are trying to gauge the early effects, often looking at things like infant mortality, which you can gauge today rather than looking 20 years later to see how healthy somebody is. And there have been pluses and minuses. In some cases you find improvements in health outcomes; in some cases you find almost no effect. But it may be early days to gauge that.

So for all of those reasons, we chose to focus, especially in a short paper like this, on these household benefits, which should be almost immediately perceptible. If you're trying to reduce the financial burden of adverse health events in households, that should be something that we can see right away. And in fact we can. So that's what I'll be outlining the evidence on for you.

What I think is a useful bottom line here is to think about how we might create a virtuous cycle of less financial burden on households, better health, more investment in health, and then less financial burden and more investment in health going forward. You know, health is such a fundamental aspect of development, the best development economists in the world seem only to agree about health as the one sine qua non, the one thing you need to get off the ground. Even the evidence on education, which also seems so fundamental, is much more mixed. But if you can get reasonable health status for people in a poor country, they have a much better shot of turning it into a rich country. And so we want to use the tools that we have – and UHC is one of them – to perhaps set in motion this virtuous cycle of better health investment and then better health for future generations.

Well, let's talk about a few of the issues that come up when you start to consider a UHC system and how to capture some of these household benefits. One is the affordability of the program itself for households. How easy is it for them to actually opt in to the system and to use the services that might be provided to them? One issue that comes up constantly is that of user fees. And there are a lot of different ways to gauge user fees. It could be a copayment for a physician's visit; it could be some sort of deductible; it could be a percentage of costs. User fees have almost always been found to discourage people's use of care. And if the idea of universal health coverage is to increase the access of care, you have to make sure that it's within the ability and willingness of people to pay.

One tool that you can use to assure that to some degree is a cap on annual spending. You can say, OK, well, we have user fees, but only up to $50 a year, and after that everything's paid for. So these are sort of two variables that you can already tweak, or two dials that you could tweak as you're designing your UHC system.

But I think just as important as these variables are the ones that are related to risk pooling. We've seen a lot of different systems grow up around the world. Some of them were spoken about, in the first roundtable in this series, by Bill Schaue (ph), where you have different pools set up for different populations. You might see one health insurance pool for government employees and then another one set up for the private sector, or you might see one for the military and then another one for private sector. You might see them set up on village-level basis, so that each little village or cluster of villages has its own mutual insurance. We have sometimes seen the separation between people who are in formal and informal employment, so that you have some sort of employer-sponsored or -provided health insurance for those in formal employment, and then for informal employment there's a whole other system that's set up by the government.

This kind of segregation often takes you into trouble because, as Laurie pointed out, if you want to really achieve the genius of risk pooling, you need to have a big enough pool. You need to have people with different health status. And the more that you separate them by variables that may be related to their health status, such as whether they have a steady government job or they have formal employment, the less benefit you're likely to get out of risk pooling at the household level.

Another issue that comes up sometimes is enrollment. Some of these programs are mandatory. Some of them are voluntary. With the mandatory ones, sometimes even though everybody's supposed to get coverage, they have a registration process which is extremely difficult and onerous. And sometimes you have people who don't even have an official national identification number or card and it's very hard for them to actually sign up for the insurance which is their right. For the voluntary programs, we run into potential problems of adverse selection. Who are the people who are going to sign up for health insurance? You can bet that the first ones there are the ones who think they might be getting sick soon. This is something we're well familiar with in the U.S. And we've seen it happen. We've seen death spirals of insurance plans that occur as a result.

So these are all issues that need to be taken into account, not just to ensure the success of the program, but to ensure that these benefits that we talked about percolate down to the household level.

So in the paper, we have a few examples of some programs that are already in existence. We've drawn a little bit on the UHC Forward database from the joint learning program, which is referenced here. But I think what I'd like to talk about more is whether it works, whether we actually see evidence that these benefits can be accrued and what's associated with the accrual of those benefits.

Well, for affordability, definitely yes. When we have UHC programs that don't have overly onerous user fees, we definitely see access to care improving. And along with that, not surprisingly, we see utilization of care rising as well. But that can sometimes be a bit of a double-edged sword, and sometimes it occurs, to the surprise of the government organizing the program or whatever the entity is that organizes it, because of moral hazard. You lower the price of care; people get more care; they might even be a little less careful about getting sick because the consequences are not so great. This happened in Taiwan in the '90s. They got a lot more utilization than they were expecting. They had to fiddle some budgets and see how they could adjust for the future.

Another issue, though, with affordability is that the out-of-pocket cost doesn't always fall even when you set up a UHC program. And you might ask, well how could that possibly be? Well, we've run into some cases, for example in the Philippines, where the private providers that are reimbursed by the government see that the government is passing on only a small percentage of those costs to the consumer and they say, well, you can jack up the prices, basically charging the consumer the same as what they used to pay, but we're getting a bigger reimbursement from the government because the consumer only pays a small share of that. So some of these systems can be open to gaming, and that's something to look out for as well.

But overall the evidence is quite strong that the affordability is improved, the access to care is improved, and so is utilization. In terms of evidence for the benefits of risk pooling, we certainly see big drops in catastrophic spending, and that is, as I said, probably the biggest benefit that we can expect and the most desirous one at the household level. And we see those in different regions all around the world. Several examples are cited in here.

On human capacity, which was the third of these household benefits that I mentioned, we are starting to see some results. As you might expect, since it's somewhat indirect, it could take a little more time, and the scientific methods that you might use to gauge that are a little more difficult because there are a lot of things that could go into human capacity. So trying to figure out what's the delta that you get from this kind of program could be difficult. You need a randomized controlled trial or some other perhaps quasi-experimental design. Doing a rigorous paper is not the easiest thing, but we've seen a little bit.

We've seen some benefits to worker productivity, as you might expect. And I think, by the way, some of the best proof that insurance coverage can improve worker productivity is the fact that you've seen some large employers in poor countries, like Pakistan for example, setting up basically HMOs for their workers and paying the bulk of the cost because they know that they'll recoup that in terms of reduced absenteeism and higher productivity. And we've mentioned a couple of those in the report.

Also, in terms of human capacity, though, we are starting to see these effects on the next generation, that children's school enrollment, for example, in some of the Chinese rural health insurance demonstrations seems to go up, which could be because it's – they're not required to stay at home and take care of their parents when they're ill – something as simple as that. And these are the kinds of things that I hope that more economists like myself will look into because I think that they make a powerful case for the humanitarian aspects of universal health coverage.

So I'll just end by giving you a little bit of a prospectus for the future. Obviously there are many reasons to consider a UHC program. As I said, there are many different models; it's not all about single payer, as Laurie said. But there are many potential benefits that you could capture. There's not rigorous evidence supporting all of them yet, but that's partly because we're in the early stages when it comes to the developing world and UHC. But I think that the household benefits that have been documented so far make a strong case.

And when you see what the political leaders who have ushered in UHC and their countries have spoken about, it is indeed these household benefits that they say we cannot have our people burdened not just be health events, but by the catastrophic costs that come – can come with them if we hope to grow into the future. And some of the most far-sighted leaders have recognized this, and I hope that more will in the future. Thank you.

MR. HUANG: Thank you, Daniel. Actually when I was listening to your report, received this message from the Kaiser Family Foundation about recent poll data on the American attitudes toward the Affordable Health Care Act that said there was a perfect divide on the Americans' attitudes toward the act. Indeed they found that more than 50 percent of all Americans still believe that the Supreme Court should rule it's unconstitutional, the individual mandate requiring nearly everyone obtaining health insurance. So – (chuckles) – despite that the – all those – the benefits that Daniel alluded to, the – it seems that Americans still haven't realized that. (Laughs.)

MR. ALTMAN: Well, I'm not a constitutional lawyer, but this may be unconstitutional. That doesn't mean it's a bad idea. (Laughter.)

MR. HUANG: So, OK. Alex?

ALEXANDER S. PREKER: Well, thanks very much for having invited me here, Laurie and others from the – from New York, and I – it's – I'm delighted as a preliminary to my – to be here in this office. It's – congratulations to the council for having set up this new office here. So it's really nice. We'll have to come and have some of our meetings in the World Bank here.

MS. GARRETT: Yeah, that long walk two blocks away.

DR. PREKER: Exactly. So we – I'll forego the reimbursement on the taxi this time.

MS. GARRETT: (Laughs.)

DR. PREKER: So this is an immensely important topic, and it's interesting because Rob Hecht, who's here from Results for Development – he and I were working together in 1993 when the bank was doing its world health report on "Investing in Health," and one of the interesting things at that time was that we came up with some statistics that showed that although 90 percent of the disease burden in the world is in developing countries, only 10 percent of the financing is there. So there was this very big disparity between where the needs are and where the money is at the global level.

Interestingly enough, if one looks at the data now, you know, which is almost 20 years later, it's not like that. It's 60-40, which demonstrates the change that has happened in the last 20 years in terms of distribution of financing globally. So you now have the BRIC countries – if you take the BRIC – and Goldman Sachs had coined this idea – Brazil, Russia, India and China – with "S" in the – in brackets – South Africa (was ?) sort of – was supposed to be part of that – and then, once they got through that, they added "N-11," the next 11, which includes countries like Indonesia and Malaysia. But what's interesting is how have those countries now performed in terms of – in terms of this agenda? Because one could say that, well, it's the BRIC N-11 that really would have the largest capacity.

So let's look at whether or not those countries have actually been able, during that 20 years, while this shift in funding has actually taken place – you know, has there been a change in the way that the population might have access to that – that financing? So if we just look at the table now in – on page 10 for a second – and I think Daniel kind of highlighted this – but I just want to draw out a couple of observations on this table. So it's on Page 10.

So it's interesting that when one looks at places like Kenya, where the size of the pool is 7 (percent), and then out of pocket is 51 (percent). And then you go down the list – Mali is the same, 3 (percent), 52 (percent); India a bit further down, 9 (percent) and 50 (percent). So the observation is that, you know, countries that really have poor coverage or poor pools end up spending a lot of money out of pocket. And of course the troubling part is then, when you now go further along and you see a place like (Turkish ?) Republic, which is 97 percent coverage – well, it's still got 40 percent out of pocket. And if you go down further on the list there – Philippines, 80 percent coverage, but 52 (percent) – (5)4 percent out of pocket. And then you go down to the bottom, which is where we would like to see it, Colombia and Thailand where 88 percent and 72 percent for Thailand; Colombia, 88 (percent). And there you have 8 (percent) and 16 (percent).

So I think this where we now – need to now be thinking a little bit. How is it that at least two countries have succeeded in reaching the coverage level and then, at the same time, doing something about that out-of-pocket exposure that they – that the population has to health expenditure? And then other countries that, you know, one would say would – you know, they're part of the BRIC – you know, India is there; I don't see many of the other BRICS in there. Chile is not – no, China is not there.

MS. GARRETT (?): Brazil is.

DR. PREKER: Yeah, Brazil is there. So Brazil is there as well.

And these countries are actually not doing well in the distribution of the – of the funding and clearly have not succeeded in putting in place a mechanism that dealt with that out-of-pocket side of the expenditure. So that raises a couple of issues, which I think is really the crux of the matter is that, you know, there's an ideological debate about scaling up and then there's the pragmatic debate about what you do about it.

And I think this, in some ways, is also the thing that U.S. is facing right now. You've got the – you've got the ideological debate, but then you have a pragmatic debate. You know, what are the solutions and how do you actually achieve it? And that now – one of the pragmatic solutions is being challenged of course in the Supreme Court. But, you know, this was one of many options. It was not the only one, but it was one of many. And now that's being put to a test to see how consistent that is with other principles in society, and that's precisely what we find in many developing countries.

So I worked a little bit in Ghana in the early – well, 2003 to 2007. And we helped the Ghanaian government at that time put in place a scale-up program for health insurance, essentially what – at the time that we started working with the government, they had – they had inherited a British-style health system, which was basically free care, universal coverage. So going back about 45 years, that's the kind of system that they had inherited. So on the – on the surface of it, you would say, well, that's great; you know, they – I mean, they came from a background where they had full coverage, and everybody had entitlement to services.

Well, within 10 years after the colonial powers left, that system collapsed because the system didn't have enough money, and so what happened was that although you had a rule that said everybody has access to care, that rule eroded in practice, and people ended up spending money out of pocket because there wasn't enough money in the system. And then the government even came in with – initially, it was an informal kind of payment, but then the government eventually came in with a rule that said, well, if you are going to come to a public clinic, you have to pay something because, you know, our clinics are going bankrupt, so the Bamako type of thing that, you know, why shouldn't we be getting part of the money in the public sector, because we know you're paying the money anyways out of pocket, so why shouldn't the government benefit, and so we can finance part of our health service with that money out of pocket?

And so they brought in a rule that – which was called in Ghana a kind of a nice term – it's called "cash and carry." You know, you come in with your cash, and you carry away the services. So they brought in that kind of a system. And that worked OK for a while. It did help a lot, studies that were done that showed that – like in Bamako, it showed the institutions that were collecting and were allowed to retain those fees that they did collect out of pocket ended up being better staffed and ended up having at least drugs so that when people went there, they actually got treated, whereas the clinics that didn't have that, although in principle, there was free care, basically, people were getting nothing. So they got free care, but they got free care to nothing.

And I think this is what we are seeing in some of these places here. When you look at the – when you look at some of these statistics – (inaudible) – public, when 98 – 97 percent is free care, but clearly, they're getting nothing, because they are paying 40 percent out of pocket. So, you know, they are not getting what they want, so they are – they are choosing to finance.

OK, so Ghana then decided, OK, we're going to abolish the "cash and carry," and instead of that, if people are willing to pay, why don't we, instead of having people pay at the point of service, why don't we just put that money in a pool, and the – I mean, clearly, the population is willing to pay, so that's good, so let's now take advantage of the fact that the population is willing to pay, we'll put that money into a pool, and we'll make that into an insurance program so that that way, everybody contributes a little bit, because you know, the evidence is there that they are willing to pay, but instead of paying when you get sick, people will pay ahead of time, and we create a health insurance system. So that's essentially what they did. They created a health insurance system, and then they said, well, but you know, many people can't afford to make that small contribution, so we're going to subsidize the people who can't afford to pay the premium.

And what ended up happening then, of course, is that they put in place the system, and coverage went up very quickly to 70 percent. And then the thing unraveled because what was happening was all sorts of administrative things: The system wasn't able to clear the bills; they weren't able to handle the claims; they weren't able to register poor people, so even though poor people had access to the services, actually, poor people weren't getting registered, not unlike in the U.S., where you have the Medicaid patients – often there's a – you find – (inaudible) – statistic shows that many Medicaid patients actually don't register. It's either too complicated, or they don't register, or they may be illegal workers or whatever. There's a lot of reasons, but they don't get into the system.

And so we found the same thing, that, you know, even though you have the system in place, the people who really should benefit, the rules are there, but they don't come in. And so I think once again we are seeing this here in this table, and which you are highlighting in this report, that the rules by themselves aren't enough unless you couple them with some pragmatic institutions. You know, and part of it is the human resources that you were mentioning. But there are a couple other very important things. And you know, drugs and equipment are two very important elements of a – of the health system that we often forget. And when you look at the expenditure in a health service, often the big expenditure item is actually drugs plus human resources. So in many – in many emerging economies, you can have as high as 50 percent, even 60 percent of the whole health expenditure is actually on pharmaceuticals.

So once again, it means that a single thing can't solve the problem. You really have to have – it has to be an – universal coverage can't go by itself. It can't just be the front end where you're collecting the money, and then you say everybody is covered. It has to go along with institutional reforms. I think the report nicely highlights some of those institutional things that you think are important in this.

And then I just want to end on one note is that those institutions, we often think kind of in concrete terms that those institutions are things like buildings and, you know, bodies – buildings and bodies and drugs and the equipment. But I'm now beginning to work in a part of the bank which looks at how better to work with the private sector. I work in the IFC part of the bank. And I work in a part of the IFC which is called the investment climate department, where we are looking at investment policies toward the private sector and whether or not those investment policies actually encourage the private sector to, one, be functional, and second of all, to have some sort of a social benefit.

And it's really interest, a report that we have just come out of, following a survey that we did in the Africa region, which shows that many governments put in place programs that intend to mobilize resources and energy from the private sector. In fact, I think the statistic was somewhere close to 80 percent actually have rules about that. And only 6 percent actually implement them.

So one of the big challenges, I think also in the insurance side, which we find in many countries and which once again you are highlighting in this report, is that the capacity to implement really has to be there, and it goes beyond the brick-mortar, the bodies and the – and the drugs. And it includes some of the rules and regulations and how those rules and regulations are enforced, but also the culture of the population that's using those services and whether or not those populations end up behaving in a way that's consistent with the new system that's in place.

And with that, I'll just highlight a small final example that once again comes from Ghana, where you had a mother that came to a clinic with a child and was somebody that came from a background where she could have belonged to – you know, she could have belonged to the insurance scheme, or she could have been subsidized through the subsidies program. And once she got to the clinic, she didn't have coverage. And so the clinic said, well, I mean, the rules we have is that you have to have coverage, and if you don't, we can't give you care.

And so she was turned down. And this of course became a very big scandal. It became a – you know, it became a political fiasco for two reasons. One, it was a political fiasco because, you know, why should a mother with a young child be refused care? You know, so that – you know, there was a moral aspect on the treatment part. But it was also a fiasco because it was a PR fiasco because of course if she had gotten the care, you now destroy the whole health insurance system because every other mother with a child would say, well, when we get sick, we can just walk in and we're going to get care, so why should we bother paying? So it opens up the floodgates with moral hazard and noncompliance.

And I think that really demonstrates the very difficult position that governments and countries are in that are trying to do scale-up, that when you are trying to put in place things that will work, you will be forced – you – to confront that moral dilemma when the child and the mother comes to the clinic and where you have to make a judgment call. And unfortunately, of course, what often happens is that the individuals or the health care providers that are at that point of conflict, in the front line, end up making the wrong judgment calls at that point. And that of course is the big challenge that we face in many of these reforms that we're doing.

So I think this is a tremendously timely report. Congratulations on some of the insights that you have in it. And we look forward to teaming up with you and taking this agenda forward, Laurie and others. So –

MR. HUANG: Thank you, Alex.

And to the story that you shared with us on Ghana actually until very recently happened every day in China, I believe. (Chuckles.)

The – so as a presider, I have the privilege to ask the first question. This question will be about the relationship between the universal health coverage and equality. I think it is addressed in the report, although I probably didn't – in the talk, didn't allude to – but the – my question is that universal health coverage, by definition, means fairer, more efficient financing that pools risk and encourages prepayment to share health care cost equitably across the population. But the report seems to also indicate that there is no strong evidence supporting that spread of universal health coverage necessarily reduces inequality of health care access. So my question is: In what situation would universal health coverage lead to persistence, if not exacerbation, of inequality?

MR. ALTMAN: Well –

MR. HUANG: Daniel?

MR. ALTMAN: Yeah, in answering your question, Yanzhong, I'll draw on a conversation with Julio Frenk last year. He's the former minister of health in Mexico and now dean of the School of Public Health at Harvard. And we were talking about what would improve health outcomes in developing countries, and we discussed the extension of care on a broader basis. And he said it's not going to make a fundamental difference to the lives of a lot of the poorest people until the bigger issues of inequality are addressed; that it – there is a chicken-and-egg problem here in the sense that inequality can breed poor health outcomes for people at the bottom, which can then worsen their outcomes in the labor force and thus worsen inequality in the long term.

But I don't think I would start looking to universal health coverage to be a major reducer of inequality until some of the more fundamental drivers of inequality were addressed. It may have some effect on the margin, but there are such enormous other drivers at work right now – for example, just the opening of markets through globalization seems to decrease inequality between countries but increase it within countries, in many cases. You know, with that kind of wave percolating through your economy, it might be difficult to pick up the effect of UHC. But I would never underestimate the abilities of a skilled empirical economist in a randomized controlled trial.

MS. GARRETT: (Off mic.)

MR. HUANG: OK, I wonder – to both Laurie and Alex, can you respond?

MS. GARRETT: Well, I – I'd like to take Alex's bottom line, the woman in Ghana going with her child for care and being turned away. There's a number of ways that scenario could have played out, and I've personally seen it play out in every one of these ways. One is – goes to the inequality question.

I remember very well doing a series of following women who had babies in sub-Saharan African countries with high fevers. And it was fevers where it's a matter of life and death to seek appropriate care within – you have maybe a 24-, 48-hour window or the baby dies. In most cases, it was either – it was measles or malaria.

And what I saw was, these women typically lived in the rural areas, but their husbands or the fathers of these children were typically in the cities, where they had a second family and lived a completely separate life. The women could not and would not violate relations with their husbands to go straight to the nearest clinic. They would go to the city, find the husband – with the ailing baby – get his permission and then go to the clinic. So no universal health coverage access is going to save that baby's life if the inequity in the gender relations in those marriages and across whole societies is an impediment to getting the appropriate care when you need it.

But also with this example of the mother and ailing child, she may very well have had coverage and then gotten to a clinic that had no M.D. in the entire clinic, had no equipment, had no skilled personnel, or had – as we've all seen, if we've traveled widely in poor countries, had an alleged doctor, alleged medical staff, alleged equipment, and no electricity, no running water and no appropriate hygiene, so that seeking care could actually be a life-threatening event. So if all pieces are not in place, you obviously don't get to nirvana and you don't get to equity.

And then I guess the final piece of the equity question is something that we all see around the world, the difference between rural and urban, and one key piece of that is not just that health provision is very concentrated in urban areas but also that your ability to access it will depend on your personal finances because you still have to pay for transport. So even if once you get to the clinic, the care is covered, you had to get there, and that becomes the other rate-limiting step that is class-biased.

MR. ALTMAN: Yeah. Can I just add one sentence onto that, which is, a lot of people say, isn't it easier for poor people to go to the hospital than rich people, because the value of rich people's time is so much higher – you know, they – if you have a hundred-dollar-an-hour job versus a minimum wage job? No, you're looking at it backwards. The problem is that that that minimum wage means a lot more to that person than a couple of hundred-dollar-an-hour hours to a wealthy person, and it's much harder for them to take that time away in going to the clinic, even if all the pieces of the puzzle, as Laurie said, are there.

MR. HUANG: OK. Alex?

MR. PREKER: OK, so on the universal – and equality, there's a troublesome dimension to that, and that is that in higher-income countries, it makes a lot of sense. If – you know, I'm Canadian. In Canada, everybody has access to care, and that means poor people and rich people have access to care, and Canadians are rich enough so we can afford to give away care to both rich and poor people.

But the problem is, if you're living in Mali or in other very low-income countries, and you've got a hundred dollars, and you've got a hundred people, and you give $1 to each one of the hundred people, both the people who are rich and the people who are poor, then everybody's getting $1. But if you took the hundred dollars and you gave the hundred dollars to only the 20 people who are really poor, each one of those 20 people would be getting $5, and the other people would be getting – maybe spending other money, but they have the money to spend out of pocket, and therefore you'd actually be more successful in having equity by not extending universally and spreading the finances thinly across the whole population.

So I think this is where we have the tension, I think, at low-income countries between the ideology of what we think is universalist and therefore, you know, it's good for the poor, and the reality of the economics; that when you actually do that and you execute it, you're actually taking money away from the poor whenever you have a program which is universal.

MR. HUANG: Very interesting.

So we have about 35 minutes. So I want to open the floor up to questions. Please identify yourself and your affiliation before responding. Please also flip your tent card to indicate that you have a question, and we also allow one-finger rule at – if you have any quick follow-up remarks.

So I'm going to start with Jeanette.

Q: Thank you.

MR. HUANG: Oh, by the way, Jeanette is the new managing director of the Rockefeller Foundation in charge of health.

Q: Thank you. Very interesting for me, because in fact it's a discourse that I am not familiar with. In fact people that are from developing countries, in general, when we talked about universal health coverage, we basically talked about access to care, not necessarily about the financial impact. So it has been very important for me to sort of listen to the discussion. I understand that there is an issue there; that basically the implicit assumption is that if you increase coverage, financial coverage, you will increase access and then you will improve health outcomes. I would challenge that, though, and I think that we need to discuss, probably in a different forum, about that implicit assumption.

Now I'd like to make a comment – a couple of comments. The first one is the comment on universal health coverage and equity. In fact the issue there is in whatever dimension you are talking, if it is the financial dimension or the access dimension, in the road towards achieving 100 percent – let's say from 10 (percent) to 100 (percent) – not all the groups of the population benefit the same. So in fact when you begin to implement this – basically, in the road to universal, you create more inequities, unless you focus on beginning with the worst-off, which is what UNICEF in fact is doing in its newest strategy. They are basically making the case. And if you do the costing and the economic exercises, you realize that it's much more cost-effective to do it in that way.

And then the other comment – and then I just want to use Table 10 as an example, because here there are some examples. There's one example that I know very well, which is the example of Chile, because in fact I'm Chilean. And you are saying here – the tables say here that we implemented the universal health coverage in 1979. I would say that in fact we destroyed universal health coverage in 1979, because until then we had basically a system that had one pool that provided access to everyone. The depth of the package, though – of course the system regulated through waiting lists, and in 1979 what happened is that the pools were divided into two, one private – I mean, several private, 15 in fact – and one public.

And why I'm putting this example – not because I'm from Chile; I'm putting this example because it depends on your definition. I mean, if you think about the former Soviet Union countries, according to the definition of universal health coverage, they did have universal health coverage, and from one day to the other, they didn't have it. And what we are having now, it's basically the rebuilding of the universal health coverage using different instruments.

And you can argue that in fact, it was a theoretical universal health coverage because people didn't get covered. In fact, they did; the issue was that they didn't get access to services.

So what I'm trying to say is that the discussion, I think it's a bit more broader because it has to do with some historical process of reforms that I think Alex said in his intervention. And it's very interesting to continue this conversation.

MR. HUANG: Jeanette, you mention the Soviet case. This actually remind me of China. Actually, China recent – just a couple of days ago, announced it has achieved universal health coverage. (Chuckles.) So covering 100 – 1.4 – nearly 1.4 billion people, well, that is truly an achievement, right? (Chuckles.) Laurie.

MS. GARRETT: I think you raise some very important points, and they actually were all points that we debated and grappled with through this entire process – you know, trying to find a way to focus in and not end up producing another 1,000-page document that nobody reads. Well, hopefully somebody reads this. (Chuckles.)

But, first of all, yes, different countries have tried to roll out universal health coverage in different ways. And many have, in fact, done exactly what you said: target the neediest first and work your way backwards. But as Daniel pointed out, many countries, this being one of them, has rolled out universal health coverage in ways that do not reflect needs, but rather specific groupings – military or – in our country, really tying access to coverage – not care, but coverage – to site of employment so that it became part of labor negotiations beginning in the early part of the 20^th century. And companies that had organized labor tended to have good health insurance coverage, and those that didn't lacked it.

So different countries have rolled out their systems in various ways. And I think often, the one that gets the most praise is what Julio Frenk rolled out in Mexico. But I think it's also instructive – and we have some citations to follow up if there is interest – I think it's also instructive to see the struggle that Brazil is having right now, because Brazil did, in fact, roll out very aggressively for the poorest population tier and created great tension within the middle class in Brazil that they're still struggling to cope with and to figure out what is justice and equity with some payment and some nonpayment in a system as complicated and massive as the nation of Brazil.

MR. ALTMAN: Yeah. It's – I agree very strongly that these are important issues to take into account, and I think that everything you said makes sense in theory. In practice, when you deal with the logistical and political implications of rolling out a system like this, it seems like, from experience around the world, it's easier to roll out a system to everyone and then start layering on the services rather than to start with a lot of services for a small group and then start layering on other populations for partly the same reasons that Laurie was referring to. But I would also point out that if you just start out providing care to the poorest, you're losing a lot of the potential benefit of risk pooling because you're targeting a population that's the sickest in society.

MR. HUANG: Alex, you have a –

MS. GARRETT: Add anything to –

MR. PREKER: No.

MR. HUANG: OK. Irena (ph)?

Q: Thank you so much for such a great panel, first of all.

I have a question related to a presentation, two months ago, of Georgian President Mikheil Saakashvili at the World Bank. And in his speech, he spoke about achievements in Georgia. And one of the achievements was hospitals all around the country. He calls these hospital like five-star hotels. And these hospitals are available for everyone.

And in this context, I would like to ask this distinguished panel and especially Alex how it was made by coverage, how you see this model, because Georgia is not a rich country; probably it's a(n) emerging economy; maybe we can call it from poor-to middle-income country. And do you think this kind of model could work for other countries like this kind – this type of countries?

And the other question is about equality, because even President Saakashvili stressed that all people, rural people, poorer people could come to this hospital. They are – have modern equipment. But anyway, they are not equal. I'm – but he said, for example, once in their life they could be – could have appropriate service – and how it's related to question of equality.

And following – so Canada is famous for its health coverage. Why other countries, for example, United States, cannot follow this example in health coverage?

MS. GARRETT: I'll take the latter, you take the former. (Laughter.)

MR. PREKER: OK. Yes, then I don't have to defend the Canadian system. (Laughter.)

Well, I think Georgia is quite typical of what happened in the – you know, the states that were part of the former Soviet Union after the collapse of the – of the former Soviet Union. I've been to Georgia several times, and – so I know exactly what you're talking about. The problem was that very shortly after the transition, the bank – the government in Georgia basically went bankrupt. It had a compression of economic growth, of – I think it was, like, 70 percent. It was one of the most hard-hit of the Eastern European countries in terms of – in terms of collapse of the economy.

And so essentially the government was bankrupt, which meant that they had a very large stock of facilities, hospitals and also doctors that were on the payroll, because everybody was a civil servant on the payroll, or at least a government employee, and no money. And so people were not – basically, the salary bill stopped, people would no longer get paid, and there was no drugs in the hospital. I remember the last time I visited, which was I guess now close to 10 years ago, but at that time, you know, I had to walk up seven stairs because, you know, there was no light, there was no electricity. It was – basically, the service had collapsed.

So in a context like that, you know, if you have one functioning hospital that actually is functioning, I mean, there is a need for tertiary care in Georgia like there's – anybody – anywhere else in the world. I mean, this is a country – it has a lot of chronic disease and a lot of acute disease that need to be dealt with. And, you know, you can die in the street or you can die in the hospital.

But the issue, I think, that Georgia faces with this kind of a situation was – it's the same as we face in many other parts of the world – is if that hospital, now is functioning, was reserved and could be used only for the acute care that it was built for and not be giving primary care and stuff that could be given in clinics, then you might end up having something that actually works. But the problem is, because the rest of the health services collapsed, if you have one institution that has been made functional and you have the rest of the service that's collapsed, even in Georgia, this is never going to work, because you can't have 6 million or whatever it is that your population is – you can't have 6 million people coming to one place and getting care for primary care. It just – it's just not going to work.

This institution will collapse unless, you know, it's – unless that institution sits on top of a – the pyramid of a large health service. So I think this is a – and it's a difficult dilemma many countries face, is because you like to have one place which provides decent care, but you're not going to – 6 million people are not going to be able to get care from that one place.

MS. GARRETT: When I – 14 years ago, I traveled the – all over Georgia looking at their health system. And I think that the Georgia example is actually an interesting one that – for you to have raised because the advantage that Georgia today has is that the vast majority of the society truly rejected the Soviet model of health, and what they were left with was something so horrible – I mean, some of the worst atrocities I've ever seen in health care delivery, I saw back then in Georgia – you know, physicians with no gloves performing surgery, not able to scrub beforehand because there was no soap. So there – in a sense, they have an advantage now in that the – there was very little support for keeping what had existed and great possibility of coming in with a clean slate and trying to do the right thing. And similarly, Canada built its health system long ago on a clean slate.

The United States has built incrementally hundreds of different health systems so thoroughly fragmented, each with its own interest groups dependent on its continued existence, that trying to create a single or even a workable financing mechanism is impossible in America. The best we can hope for is to make these fragmentary pieces work together a little bit better, be a bit better regulated so that they can't price gouge various elements of funding, and create better equity and pooling for the largest elements of the system. And that's what the health reform act tried to do. But, as you can see, there are many interests that seek – see that they will lose if that is fully implemented and therefore are very actively fighting against it.

MR. HUANG: That's exactly what Debbie Fuentes (ph) said: just 90 percent politics, 10 percent technical-institutional details. (Laughs.)

Let's see whether we have any questions from the participants – from the teleconference participants. Anybody?

MS. GARRETT: On the phone.

MR. HUANG: On the phone?

OK – (laughs) – nobody. So Ben (ph).

Q: Bart Szewczyk (ph), Wilmer Hale and G.W. law school. Thank you very much for all of your presentations. I wanted to ask, is there any empirical evidence between the degree of universal health coverage and long-term economic growth? I guess those studies would be probably difficult to do, but is there any evidence one way or the other?

MR. ALTMAN: Short answer is no. If you're referring to sort of cross-sectional-type of analysis, that would be very difficult because the universal health coverage systems are so different that to throw in a single dummy variable for them would not give you a very good regression. So not putting it into technical terms, I think that would be very tough to do, to look at countries in comparison to each other and see whether there was an effect on growth. If you looked within one country, you'd have a better shot of finding an outcome.

And there have been some studies even in the United States looking at Medicare. It's not completely universal, but it's universal for part of the population. And the idea was to take the burden of caring for the older generation away from people who could be otherwise productive in the workforce, in addition to all the other benefits that it might have. And you know, I think that there's some evidence to support positive effects, but spotty and not necessarily so generalizable across contexts that I would want to take it from one country and apply it to another.

MR. HUANG: Comments?

DR. PREKER: Yeah, I mean, there's been – recently, there's been the commission of growth – health and growth. So if you want to look at what they did, you – it's worthwhile just Googling that.

I mean, there's basically two problems. One is that we haven't agreed on what universal coverage is, and so it's hard to do regressions against something you haven't defined yet. And so it's not an easy thing to draw the correlation.

But there's a reverse correlation, and that is that countries that tend to go through rapid growth tend to become more inequitable during the growth phase (till you get ?) industrialization process. And during that inequity period, you tend to have health care becoming less equitable, like you saw in Georgia and other countries in Eastern Europe. So one has to be careful about the cause and effect there. But certainly if one looks at the world where you have rapid growth and economic growth, like China, those places – those places have become much more inequitable in health care. I don't think it's the health care that led to the growth, because you would then say, well, inequitable health care leads to growth. No, I think that's not the way it is. But I think you can expect to see inequity in health care appear when you have rapid population growth in some areas and where part of the population ends up having purchasing power, which means that they can buy care that the general population can't afford.

MS. GARRETT: Can I follow up?

Alex, I want to ask you about something. The – one of the things we've seen in the most rapidly expanding economies in the late 20^th or early 21^st centuries. If you look at China, if you look at post-Soviet Russia, you look at – less so at Brazil, and certainly in India, you see that as these economies explode, the public sector salaries for those that are not engaged in highly corruption-prone sectors do not keep pace with growth in the private sector. So there's the envy-of-your-neighbor problem, and that seems to compel, in a way, an increase in corruption in direct health provision so that – for example, I saw myself in China, a doctor will say to a patient, here's what – here's the free syringe; I can now give you an injection with it; it's been used before. (Laughter.) Here's the one that's still in its packaging, but that'll cost you $50. Do you want me to inject you with this one or this one? And that $50 is going to the doctor. So is there a way to have this economic growth without also enhancing not only the lack of equity, but also corruption within the health sector?

DR. PREKER: All right, I don't have the answer to that. I mean, we know empirically that countries that go through a very rapid growth period, you have social consequences. And so it's one of the things that is there. And you know, when you (saw ?) – the definition of emerging markets by Goldman Sachs is it's growth in the double digits with large populations and where you have population dynamics that's moving towards aging. So that's the – you know, that's the definition of an emerging economy, and I think in most of the emerging economy, you've had – you've had problems in the health side. So they go through a phase and then, you know – then eventually, when you have a sufficient middle class that ends up with political power, then that middle class starts demanding social services that are reasonable for the middle class. And that's what you're basically seeing now in both China and India. You have the growth phase, and now you have a middle class that's beginning to say, we're not happy with this anymore; we're – you know, we want change. And so (there's ?) this change happening in both China and in India.

MR. ALTMAN: (But ?) that creates an additional causality problem because it's the income growth that's leading to the health coverage, not vice versa. (Laughter.)

DR. PREKER (?): Yeah.

MR. HUANG: OK. Jesse?

Q: Thanks. All right, Jesse Bump, Georgetown University. I just wanted to point out there's a tension between what we in the global health community think about as universal health coverage, which tends to be focused on equity and focused on the poorest and largely I think that comes from the mindset that that's the missing piece in existing health systems. But, as we move into the sub-Saharan and other areas where there really aren't very many systems themselves, I wanted to point out that in the health systems I've studied, none of them have come from the poor. They're all built around a paying customer at the beginning. And as Daniel said, this amounts to a rationing question, and rationing means it's an ethical issue that then has to get solved at the implementation stage around the history, politics, and economics of a particular population. Thanks.

MR. HUANG: Comments?

MS. GARRETT: Absolutely.

MR. HUANG: (Laughs.) OK, fully agree. Robert?

Q: Is that working? OK. Robert Hecht from Results for Development. This looks like a great report, and I'll read it – read it carefully.

It seems to me if you look at what's going on around the world and try to understand the trends in health systems, health financing, access to care that Jeanette was talking about, financial protection, both of those dimensions, there – there's a lot of common language around universal coverage and there is some commonalities. But in my own observation, I think there are a lot of submovements within geographies and things are happening at different speeds and different ways, and I wonder if you've been thinking about that and would – will be bringing it out in some of your future work.

In my casual look at things, it seems like there are lot of what I would call second-generation changes in health financing arrangements and coverage in some of the middle-income regions: Latin America, which already has a long history going back to the '60s, '70s, '80s; Eastern Europe – some of the Eastern European countries that made dramatic moves in the '90s and are now – they're burnishing their systems and making some gradual changes; Korea, which has recently merged many of its risk pools into a single one; Turkey – there are – there are – there are some trends going on that I would call second-generation type ones.

In the OECD countries, we see this as – it's a – it's a – it's a never-ending process, so there are third- and fourth- – very interesting things going on in the Netherlands and in the U.K., and the NHS is constantly being reconfigured and reformulated.

So the notion that there's not a single ending point but there's a constant evolution and that individual countries and groups of countries are moving at different speeds, I think, is worth reflecting on.

In my own opinion, Africa is really at a stage of early experimentation and nothing more than that. There's a lot of hype right now, but – and there are some interesting things going on in places like Ghana and Rwanda and smaller-scale things in Nigeria and Kenya and places like that. But it's early experimentation, I would say.

I think that the part of the world which is most exciting right now is East Asia and maybe India added because there, with rapid economic growth, all the political and economic underpinnings are there for quantum changes within these systems, and that's what we're seeing in China right now. India is thinking very – in very big terms, and it feels – is feeling its oats or whatever you call it, and wants to make some dramatic moves, is watching what China's doing. And places like Vietnam and Indonesia and so on you see, again, attempts to really complete somewhat fragmented systems.

So trying to get a little more nuanced, maybe, would be – would be just an interesting suggestion for you to think about when you consider what's going on across these different geographies.
The question I had, maybe for Laurie – because I know the council, when it does important work like this, often – it has a special – a special strength or comparative advantage in answering the question, well, what does this mean for the U.S. and for U.S. policy? And I didn't see anything in there, and I just wondered: Is that the next move? What does this mean for Raj? What does this mean for the CDC? What does this mean for Obama? What does this mean for the global programs that the U.S. supports and has a major say in, like the World Bank and the Global Fund and so on? It seems a little silent on the question of so what for U.S. – Council on Foreign Relations – (laughter) – for U.S. foreign policy? So I wondered if you could comment on that.

MS. GARRETT: OK.

MR. HUANG: The U.S. is the outlier. (Chuckles.)

MS. GARRETT: Well, I mean, as usual, Bob Hecht comes in with the key question and also fascinating observation about regional shifts. I was surprised you left out Singapore, because many people think one of the most exciting sort of new health systems is Singapore and – financing model.

Q: Medical savings accounts?

MS. GARRETT: Well –

Q: I don't think – I don't think so. I think that's –

MS. GARRETT: OK. I'm just saying.

Q: – that's the past, not the future, but –

MS. GARRETT: I'm just saying.

As far as the U.S. goes, we had many ways to try and tackle the UHC question. Probably most awkward one was, as Americans, to try and talk about health coverage. If there's one thing truly wrong in the United States, it's our tremendous inequity of affordable access to health care. And so I don't – we didn't feel particularly comfortable with being in the role that the United States should be telling the rest of the world, you know, how to finance health, but also that the Global Health Initiative's whole component with the sort of brass tacks of what it imagines to be health coverage and systems work is still very, very infant stage. Ariel Pablos-Mendez didn't even get in there until about a year ago – not even a year. Is it? How many – it's – 10 months ago?

Q: August.

MS. GARRETT: August. So – and then I think the other piece that added yet another layer of awkward to the question of what do we recommend about U.S. foreign policy is that we're all realistically on the edge of our seats what's going to be left of the U.S. support for its own account 150 budget by the time the FY '13 fight is over. And it's pretty hard to go out on a limb and say, and so then we should all do this huge program around universal health coverage or something if in fact we're going to be fighting to just keep very basic aspects of U.S. global health programming funded after, you know, October 1^st or after – whenever we stop being – borrowing money to keep the lights on in Washington and actually pass a budget, which probably not be until late January 2013 or even February 2013.

MR. HUANG: Daniel.

MR. ALTMAN: I would just say, very quickly, if you can't give money, you can still give advice – (laughter) – and I think in this paper –

MR. HUANG: (Chuckling.) Really?

MR. ALTMAN: – in this paper, we're trying to highlight some of the issues that are worth considering if you're a country that's thinking about a UHC program. And we don't take a position on what U.S. policy should be, but if I had to take a guess, that – U.S. policy would at least look at some of these very same issues.

I wish we had much more space to write about the regional shifts that you're discussing and some of these other issues, but as Laurie said earlier, we decided that the best thing we could do here was take a very focused look at one chunk of the problem where we seeing some early and immediate results and try and push the dialogue in that direction.

MR. HUANG: Alex, you want to comment?

MR. PREKER: No, that's fine.

MR. HUANG: Oh.

MS. GARRETT: I think Robert –

MR. HUANG: (Chuckling.) OK. Robert, yes.

Q: Yeah. Thank you. Thank you. I just had another comment and I just wanted to first say that I think this discussion has been really useful, and I just want to thank all of you for putting in the time and putting together the reports and bringing this group of people together.

And I think some of the questions that have been raised here, particularly around, you know, does UHC work, the kind of – one of the more fundamental questions – I just wanted to call everyone's attention to the fact that in September the Lancet British medical journal is putting together a special series on universal health coverage, and it will be launched then, and I think a few of the papers in that series will begin to answer some of the questions that have been raised here. But as those papers are currently in the review process, I don't want to say too much more, but I just wanted to raise the flag and put that on everyone's radar, that that will be coming up in a few months. So stay tuned for that.

MR. HUANG: Thank you, Robert.

I guess there's no questions from – but – so I'm going to ask if there's – OK. I'm going to ask the final question, again using my presider's privilege. It's about this relationship between universal health coverage and costs of care. Because obviously the report – it was on Page 13 – made it very clear that even the evidence collected to date makes a strong case for UHC as a way to cut costs, I'm curious: What kind of costs are we talking about here? Because if you look at the countries, economies such as Taiwan and China, there seems to be no indication that the spread of the UHC program would – leads to the reduction of the total health spending, because you could have the case, like in China, right, spread of UHC – actually the drop of the share of out-of-pocket spending or actually now the share is – has – is going to – drop below 30 percent, which is actually really low. But in the meantime, you found that the total health spending continued to dramatically increase.

So that – if the salary level or income level can't catch up with the increase of total health spending, you would still end up paying in the – more out-of-pocket share , OK – no, not total out-of- – total out-of-pocket spending, I mean, in the – in terms of the actual – the dollar amount.

MR. ALTMAN: Right. So I think there are two responses that go back to things that we have alluded to. One is, if you're looking for these macroefficiencies to be captured where your country all of a sudden is spending less on health care or getting more bang for its buck in health care, it may take time. It doesn't necessarily happen right at the very beginning of the UHC program, especially since a lot of these efficiencies, we think, are going to come from preventive care, which may take decades to pay off, in some cases.

The second answer – and as – and I alluded to it in the case of Taiwan – is that utilization often goes up because the price has gone down, so your total costs end up being similar or even more. And sometimes it can go up much more quickly than you might expect. And then it's the question of whether there's moral hazard and whether you need to have some level of user fees just to keep it in check.

You know, we talked about the woman and her baby being turned away from a health clinic, potentially. You know, in the United Kingdom, which has a very well-known national health insurance system, though obviously not a perfect one, nobody gets turned away. They don't even ask you for any form of identification. They don't, however, give the best quality of health care that's available in the country. And that has some – that goes some way to controlling the moral hazard. Those other high levels of health care are available. You have to pay for them a hundred percent out of pocket or get a corollary insurance plan to the public health insurance you already have. But it allows that other option.

Now, that also introduces all sorts of new questions about equity and distribution of resources in the health sector that I'm sure Professor Bump (sp) and others would want to discuss with us. But I think that to your basic question about the overall macro level of health costs, there are those two basic responses.

MR. HUANG: Any other comments?

MR. PREKER: Well, just a quick economic response. Health care is a luxury good, and the observation we've had is that growth in health care is faster than GDP growth, which means that countries, as they get richer, are willing to – populations are willing to spend more. And that increases. So, you know, U.S. is most likely going to spend over 20 percent shortly. And there's no way of really stopping that. So the cost containment, which tends to be more in the public side – so when you put the lid on the expenditure in the public side, then it's natural people are going to spend out of pocket because if they can't get it on the public side, they're going to spend it personally because you've got a lot of – law of economics, and you've got to get the number up there somehow. So if it doesn't come from the public, it's going to come from the private.

MS. GARRETT: Well, and this in a way goes to Robert Hecht's point because we – you know, in terms of the regional variations in trends because, you know, the truth is if there's no capping of any kind, no personal limit on spending, most people will demand the absolute nirvana of health: I want to live to be 110; I want to die in my sleep having had no aches and pains before I die. I mean, who doesn't have that fantasy? But for a system to be built with that as the, you know, gold standard to be achieved universally for all citizenry and payment to somehow be available to achieve such a standard is entirely unrealistic and will bankrupt the society very quickly.

Well, I think we see now is all across Europe, where there's a great deal of experimentation going on, part of it is a realization that, A, the expectation level is too high in the population, so that not only is utilization extraordinary, but it's utilization for two weeks in a spa, you know, but also that the population is aging, so that the very expensive needs level is rising, that it's above expectations.

 

And I think it's realistic to look ahead and say, look, first of all, everybody's definition of what UHC is is going to be different. Each society is going to have its own cultural perspective, and that in many cases is going to reflect how the culture feels about health, how important is health in your culture, which kind of reminds me of a famous set of studies done by the Columbia Mailman School of Public Health back 10 years ago in the early days – 15 years ago – early days of the HIV pandemic, asking the question, why was it that uptake of HIV-related services and testing and even condom use was so poor in Harlem compared to down in Chelsea.

So you had two specific communities on the island of Manhattan, both at very high risk for HIV, absolutely diametrically opposite utilization rates for services, regardless of payment. And the answer was simply that in the Chelsea neighborhood, which was overwhelmingly white and where most of the individuals at risk were gay men, it was a community that thought health was at the top of its agenda. It was the number one issue in their lives, and therefore they really fought for every single service they could get, whereas in Harlem, most of the people surveyed said, well, let's see, health, any aspect of health, even my pregnancy and having a safe baby, is down here compared to not getting shot, paying the rent, finding money for food tomorrow, getting my welfare check cashed, et cetera, so that by the time you got to, do I have hypertension, or am I at risk for HIV, it was 15 seconds of your 24-hour agenda.

And I think that's yet another whole issue that plays into the regional variations and social variations and class variations in uptake and use of health services. We're just looking at a teeny little piece. And we hope that this has been helpful.

MR. HUANG: Thank you, Laurie. Obviously, this issue is much more complicated than we have expected – (chuckles) – that as the – this – the remarks of our speakers have indicated.

So that concludes our universal health coverage round-table series. I'd like to take this opportunity to thank our three speakers, Daniel, Laurie and Alex, for their contribution to this round-table meeting. And also, I'd like to thank the Rockefeller Foundation, especially Robert, for his crucial role in making that round-table series possible. And I'd also like to thank our research associates, and particularly Zoe Liberman – you have all received emails from her – and for her assistance in making that possible, and also for – (inaudible) – for her assistance this afternoon. And last but not least, I'd like to thank you all who participate in today's meetings for making such a lively and enjoyable discussion. And thank you. Enjoy rest of the day. (Applause.)

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THIS IS A RUSH TRANSCRIPT.

YANZHONG HUANG: Good afternoon. Welcome to the Council on Foreign Relations. I'm Yanzhong Huang, senior fellow for global health at the Council on Foreign Relations, and this is our final meeting of the new Universal Health Coverage Roundtable Series.

The meeting will discuss the council's new report, "The New Global Health Agenda: Universal Health Coverage." I said this report is officially released by the council, but the most important part and the most innovative part of the work actually was done by Dalberg, actually, led by Daniel Altman, Vicky Hausman and their teams.

So we – privileged to have three speakers for today's discussion: Laurie Garrett, Daniel Altman and Alex Preker. All three of our speakers' full bios, are included in your handouts, so I'm not going to repeat them, save to say that Daniel is director of thought leadership at Dalberg Global Development Advisors; and Laurie is senior fellow for global health at the Council on Foreign Relations and the only writer ever to have been awarded all three of the big Ps of journalism, the Peabody, the Polk and the Pulitzer, and she's also called by WHO Director General Margaret Chan as the foremost voice of global health. The third one – (chuckles) – just – not included in the handouts, but I heard what she say. The – Alex Preker – Alex is the head of Health Industry and Investment Policy at the World Bank Group.

So for time's sake, we're going to begin with brief remarks from Laurie, followed by remarks from Daniel. And after Laurie and Daniel's remarks, Alex will comment as a respondent to the report, and then we're going to open up the floor to questions and discussion. So without further ado, Laurie.

LAURIE GARRETT: Well, it's great to see you all here. Good afternoon and enjoy your lunch. And I'm sure there's more food if you feel, you know, necessary to dive out during my remarks to put another layer on your plate.

And welcome to the Council on Foreign Relations. If you've not previously been here, this is our Washington office. Headquarters, however, are in New York. In – among the global health team, one of our team members is based here in Washington, Tom Bollyky – there you are – and the rest of us are in the New York office.

For quite some time, this phrase, UHC, universal health coverage, has been tossed about. And it seemed for years that whoever was using the term had a unique definition for it so that it was very hard to get your hands around what are we talking about when we say we want universal health coverage. If you were a Western European, you probably thought it meant you want a single-payer system run by this national government universally available to everybody in your country. If you were an American, you may very well have thought, well, that's something that's going to go to the Supreme Court. (Scattered laughter.) And if you were in most of the middle- and poor-income countries of the world, you thought, what a nice idea; not ever going to really be a reality for us.

So at much prodding from the Rockefeller Foundation, to whom we're very grateful for the push to make this series of meetings and ultimate report happen, and Ariel Pablos-Mendez, who many of you probably know, who's now serving in USAID running global health programs, we tried to take this apart and deconstruct this whole concept of universal health coverage to find what's the bottom line that's a(n) actual workable target, realizing that there is a couple of trends that play into how you analyze this picture.

The first is this very substantial, dramatic increase in the size, scope and funding of global health that occurred between roughly 2000 and 2008 and is now going downhill post-financial crisis. Most of this surge was very much initiative-based, and so it was about very specific targeted health efforts. But the further we got down that path, whether it was distributing antiretrovirals or dealing with tuberculosis prevention or bed nets for malaria, whatever it might be, the more all the participants came to recognize that if you didn't have a health system in place and you didn't have systems of health financing that removed the probability, the near certainty of bankruptcy for poor households that were afflicted with a key provider having a major illness, a traffic accident or anything that would debilitate them or kill them – if you didn't get to that core, then everything else would fall apart, and you were basically setting up a giant charity construct that would be endlessly dependent.

And similarly, there has been a large body of literature going back for quite some time arguing back and forth about what is the role of the consumer or patient in their own health, and if all health is free, does it change the relationship between the provider and the consumer or patient and the commitment that the individual has to their own health protection – preventive care, diet, exercise, all of the above.

Well, there are obviously three big problems when you talk about providing health. The first is that we have a fantastic deficit of skilled health care workers globally. And this can be defined in every single category, whether you're looking at dentists, lab technicians, pharmacists, surgeons, registered nurses, health administrators, hospital administrators; in every single category we have a deficit of personnel. And the deficit is, of course, most acute in the poorest countries in the world, especially in sub-Saharan Africa, on a per capita basis. So that's your first challenge.

The second is that the delivery systems themselves are largely very weak – in some cases quite chaotic – with difficult relations between the private providing systems, or chaos, and the public providing systems, or chaos. In many countries, the relationship between the private sector of health, which is often the number one provider – or the majority of all health care is administered privately – the relationship between that private sector and the public sector is very testy, even competitive and angry, and a spirit of cooperation is not present. And in large part, it's because one sector requires a hundred percent out-of-pocket payments on the part of the health consumer while the other sector is largely publicly or fully publicly supported.

And this creates some obvious tensions for the individual as well. If you think you're going to get better care in the private sector but it'll bankrupt your family, what do you do? And then the – from the individual point of view, this question of bankruptcy is quite serious. The institute – the International Labor Organization did its own survey a few years ago looking at this question of the bankrupting impact of illness in the absence of health coverage. And their data points were quite startling. And what they were able to show was that in many societies – and I think, at this point, it is true of the United States – a major catastrophic illness can be the primary source of bankruptcy for personal and family bankruptcy. And we have not resolved this, clearly, in the U.S.

Well, I'm going to let Daniel speak to the particulars of what's uniquely discovered in this report, but the one tip-off I want to give you is – couple of things: First, when we – we thought when you look at the question of universal health coverage, it's best to focus on it as a financing question, whether it's personal economics, family economics, village economics, country economics. Coverage is about payment. And it's best to push aside as somebody else's issue to deal with whether coverage actually gets you anything. In other words, it is wholly possible for you to have some system whereby your pay – your health is paid for – you have a voucher, you have insurance, you're in a national plan, whatever it may be – but there's no health care workers when you get to that clinic, or the clinic is in shambles when you get there. So there three pieces to you to – to actually providing health care to everybody, but the one piece we're looking at is the economic financing piece.

And finally, I just couldn't help but notice that when the Dalberg group completed their analysis, they reached a key conclusion that turns out to coincide with the primary debate now inside the United States Supreme Court. It is a question of whether it is both feasible and desirable to try and build health coverage without resting it heavily on risk pooling, and that means some sort of mandate that both the well and the sick are in the same pool sharing the same burden, and that it is probably the only way to financially make it affordable for a community, a society, a country, a whole people.

And with that, I'll be happy to pass off from there. Yanzhong.

MR. HUANG: Thank you, Laurie. Actually, before the – Dan gets started, I'm – I forgot that we have some housekeeping rules to announce. This meeting is on-the-record, so you can feel free to use and quote today's discussion. But please turn off your cellphones.

And with that, Daniel.

DANIEL ALTMAN: Thank you, Laurie and Yanzhong. It's been a pleasure to work with both of you as we prepared this report. I should also thank the Rockefeller Foundation for its generous support of this work at CFR. It's a particular pleasure for me to be here presenting to you as a member of CFR. And I'd like to start by just speaking broadly about the potential benefits that we might see from universal health coverage.

There are a lot of different ways where we might find benefit in the universal health coverage program, regardless of what the exact financing structure might be. And I'm going to separate them into three. I'm going to talk a little bit about the macro-level efficiencies that you might obtain, then what improvements you might get in health outcomes, and finally, about benefits for households.

At the macro level – these are some of the benefits that get most attention, especially in this country, when we talk about universal coverage. One is – the simplest, perhaps, is if you get everybody under a single roof or the biggest roof possible, you could save a lot in administrative costs. And I remember back in '94 when I started to look at this issue, it was estimated that you could make savings of perhaps tens of billions of dollars by having a program like Medicare that covered people throughout their lives. That used to be a lot of money once upon a time.

But more importantly, I think there's an idea that if you have a universal birth-to-death health care system which has a large coverage pool, you're getting a lot of efficiencies in how care is delivered. You're correcting a lot of incentive problems that currently jack up prices and costs within the system – for example, between the various parts of a hospital and its practices and the practices that it contracts with and their billing systems and their technicians. There are a lot of incentive and holdup problems that economists have and can identify in that system.

It also helps us to coordinate care in a way that reduces waste. If the hospital and the rehabilitation center, the home health aides and the general practitioners are all connected, then we have less likelihood of wasted or ineffectual treatments.

It allows us to negotiate lower prices, as some countries have already done. With drug manufacturers, for example, France has negotiated, as an entire country health system, to get lower prices.

And finally, it can allow us to – and I will use the word ration high-cost care. When you are trying to provide health coverage for a large population, you find that you want to give the coverage where you get the most bang for the buck, and this is something that the United Kingdom has probably been a pioneering country in doing.

So there are a lot of ways where you might be able to capture efficiencies and lower the cost to an entire economy of giving decent health care to its people.

Now, just as important are what you're getting for that money, or what – the health outcomes that you're getting for that money that you pay. And it's worth talking about where those benefits could arise. It's not the focus of this report, for reasons that I'll explain later, but I think it deserves mention.

First of all, you would expect that more people would get some kind of care if there is universal coverage, and you would also expect that more people will reserve – will receive some formal medical care, what we consider advanced, technologically enabled medical care, as opposed to traditional medicine, which can be ineffective or even counterproductive. As one of my colleagues over at the Intel-Grameen social enterprise said, they're getting care now, they're just getting it from the quacks. And so to the extent that you can shift that towards formal medicine, that might have benefit.

Also, because of the coordination of care that I mentioned earlier, you tend to have fewer errors, people getting the wrong treatment, that could actually harm them, as well as being inefficient. But we also find that you're treating patients earlier. What happens in this country, for example, quite often is people wait until something is really bad and then they show up at the emergency room if they can't afford to pay for care through normal channels or if they don't have insurance. We could avoid something like that if we had universal coverage.

Finally, perhaps most importantly, there's much more incentive for preventive care. If you're paying the health costs of somebody throughout their life, you want to start early with preventive care so that those costs will be reduced over the course of their life. And these – all of these factors could help to lead to better health outcomes.

Now, in addition to the macro-efficiencies and health outcomes, we can see some possibilities for gains within the household. One which is quite important, that Laurie was alluding to earlier, is the affordability of care. It's not the case that the poor people consume a smaller percentage of their income in health care. They consume about the same percentage of their income in health care. But because their incomes are much lower, they get a lot less care. The cost – the prices of care are not proportionately lower. So to the extent that we can mitigate that, it could be a good thing. And it's especially important if you're worried about public health, because if people anywhere in your society aren't getting treated for diseases, you have problems of contagion that could arise, especially in countries that have problems with epidemics on an unfortunately somewhat regular basis.

But even more, beyond the affordability of care, just going to a doctor or getting some sort of basic treatment, there is the potential benefit of risk pooling. And this is the genius of insurance, as any economist will tell you, that you're able to pool risk with a large group so that at no time do you have to make some extraordinary outlay in order to cover your costs. This is extremely important, especially when the out-of-pocket cost of health care is high, which it is in many of the developing countries that we may talk about today.

And the final benefit, I think, that could accrue to households and is worth noting is in human capacity. An adverse health event in the household, especially of poor households, can have a lot of negative effects, not just on the person who has the health event, who might not be able to work, might not be able to be productive, but they might not be able to take care of their children, their children might therefore suffer some effects of this. There's a whole cascade of effects that can arise.

And so if you were able to somewhat – to somehow mitigate those health disasters and, in fact, as I said, disconnect them from financial disasters as well, through risk pooling, you might see knock-on effects in human capacity. And that's something that researchers really (have/haven't ?) investigated.

So these last benefits, these household benefits, are the ones we're going to focus on today, and there are a couple reasons for that. One is that the macro-efficiencies that we've spoken about have not necessarily been the biggest focus for a lot of developing countries that have delved into universal health coverage, because they haven't had much of a health system to begin with, and thus, you know, it's not as though you're moving from one very sophisticated system to another and seeing what efficiencies you might capture. You're sort of building a system from scratch, in many cases, and you're building UHC at the same time as you're building the health system itself.

And another reason why we're focusing on the household benefits is because those health outcomes are often very difficult to determine in the early years of a UHC program. And since we are in the early years in many developing countries, the evidence is scarce, though not non-existent. If some of you would like to follow up with the work of Gideon (sp) and Diaz (sp) that's cited in the paper, you can see quite a few studies that are trying to gauge the early effects, often looking at things like infant mortality, which you can gauge today rather than looking 20 years later to see how healthy somebody is. And there have been pluses and minuses. In some cases you find improvements in health outcomes; in some cases you find almost no effect. But it may be early days to gauge that.

So for all of those reasons, we chose to focus, especially in a short paper like this, on these household benefits, which should be almost immediately perceptible. If you're trying to reduce the financial burden of adverse health events in households, that should be something that we can see right away. And in fact we can. So that's what I'll be outlining the evidence on for you.

What I think is a useful bottom line here is to think about how we might create a virtuous cycle of less financial burden on households, better health, more investment in health, and then less financial burden and more investment in health going forward. You know, health is such a fundamental aspect of development, the best development economists in the world seem only to agree about health as the one sine qua non, the one thing you need to get off the ground. Even the evidence on education, which also seems so fundamental, is much more mixed. But if you can get reasonable health status for people in a poor country, they have a much better shot of turning it into a rich country. And so we want to use the tools that we have – and UHC is one of them – to perhaps set in motion this virtuous cycle of better health investment and then better health for future generations.

Well, let's talk about a few of the issues that come up when you start to consider a UHC system and how to capture some of these household benefits. One is the affordability of the program itself for households. How easy is it for them to actually opt in to the system and to use the services that might be provided to them? One issue that comes up constantly is that of user fees. And there are a lot of different ways to gauge user fees. It could be a copayment for a physician's visit; it could be some sort of deductible; it could be a percentage of costs. User fees have almost always been found to discourage people's use of care. And if the idea of universal health coverage is to increase the access of care, you have to make sure that it's within the ability and willingness of people to pay.

One tool that you can use to assure that to some degree is a cap on annual spending. You can say, OK, well, we have user fees, but only up to $50 a year, and after that everything's paid for. So these are sort of two variables that you can already tweak, or two dials that you could tweak as you're designing your UHC system.

But I think just as important as these variables are the ones that are related to risk pooling. We've seen a lot of different systems grow up around the world. Some of them were spoken about, in the first roundtable in this series, by Bill Schaue (ph), where you have different pools set up for different populations. You might see one health insurance pool for government employees and then another one set up for the private sector, or you might see one for the military and then another one for private sector. You might see them set up on village-level basis, so that each little village or cluster of villages has its own mutual insurance. We have sometimes seen the separation between people who are in formal and informal employment, so that you have some sort of employer-sponsored or -provided health insurance for those in formal employment, and then for informal employment there's a whole other system that's set up by the government.

This kind of segregation often takes you into trouble because, as Laurie pointed out, if you want to really achieve the genius of risk pooling, you need to have a big enough pool. You need to have people with different health status. And the more that you separate them by variables that may be related to their health status, such as whether they have a steady government job or they have formal employment, the less benefit you're likely to get out of risk pooling at the household level.

Another issue that comes up sometimes is enrollment. Some of these programs are mandatory. Some of them are voluntary. With the mandatory ones, sometimes even though everybody's supposed to get coverage, they have a registration process which is extremely difficult and onerous. And sometimes you have people who don't even have an official national identification number or card and it's very hard for them to actually sign up for the insurance which is their right. For the voluntary programs, we run into potential problems of adverse selection. Who are the people who are going to sign up for health insurance? You can bet that the first ones there are the ones who think they might be getting sick soon. This is something we're well familiar with in the U.S. And we've seen it happen. We've seen death spirals of insurance plans that occur as a result.

So these are all issues that need to be taken into account, not just to ensure the success of the program, but to ensure that these benefits that we talked about percolate down to the household level.

So in the paper, we have a few examples of some programs that are already in existence. We've drawn a little bit on the UHC Forward database from the joint learning program, which is referenced here. But I think what I'd like to talk about more is whether it works, whether we actually see evidence that these benefits can be accrued and what's associated with the accrual of those benefits.

Well, for affordability, definitely yes. When we have UHC programs that don't have overly onerous user fees, we definitely see access to care improving. And along with that, not surprisingly, we see utilization of care rising as well. But that can sometimes be a bit of a double-edged sword, and sometimes it occurs, to the surprise of the government organizing the program or whatever the entity is that organizes it, because of moral hazard. You lower the price of care; people get more care; they might even be a little less careful about getting sick because the consequences are not so great. This happened in Taiwan in the '90s. They got a lot more utilization than they were expecting. They had to fiddle some budgets and see how they could adjust for the future.

Another issue, though, with affordability is that the out-of-pocket cost doesn't always fall even when you set up a UHC program. And you might ask, well how could that possibly be? Well, we've run into some cases, for example in the Philippines, where the private providers that are reimbursed by the government see that the government is passing on only a small percentage of those costs to the consumer and they say, well, you can jack up the prices, basically charging the consumer the same as what they used to pay, but we're getting a bigger reimbursement from the government because the consumer only pays a small share of that. So some of these systems can be open to gaming, and that's something to look out for as well.

But overall the evidence is quite strong that the affordability is improved, the access to care is improved, and so is utilization. In terms of evidence for the benefits of risk pooling, we certainly see big drops in catastrophic spending, and that is, as I said, probably the biggest benefit that we can expect and the most desirous one at the household level. And we see those in different regions all around the world. Several examples are cited in here.

On human capacity, which was the third of these household benefits that I mentioned, we are starting to see some results. As you might expect, since it's somewhat indirect, it could take a little more time, and the scientific methods that you might use to gauge that are a little more difficult because there are a lot of things that could go into human capacity. So trying to figure out what's the delta that you get from this kind of program could be difficult. You need a randomized controlled trial or some other perhaps quasi-experimental design. Doing a rigorous paper is not the easiest thing, but we've seen a little bit.

We've seen some benefits to worker productivity, as you might expect. And I think, by the way, some of the best proof that insurance coverage can improve worker productivity is the fact that you've seen some large employers in poor countries, like Pakistan for example, setting up basically HMOs for their workers and paying the bulk of the cost because they know that they'll recoup that in terms of reduced absenteeism and higher productivity. And we've mentioned a couple of those in the report.

Also, in terms of human capacity, though, we are starting to see these effects on the next generation, that children's school enrollment, for example, in some of the Chinese rural health insurance demonstrations seems to go up, which could be because it's – they're not required to stay at home and take care of their parents when they're ill – something as simple as that. And these are the kinds of things that I hope that more economists like myself will look into because I think that they make a powerful case for the humanitarian aspects of universal health coverage.

So I'll just end by giving you a little bit of a prospectus for the future. Obviously there are many reasons to consider a UHC program. As I said, there are many different models; it's not all about single payer, as Laurie said. But there are many potential benefits that you could capture. There's not rigorous evidence supporting all of them yet, but that's partly because we're in the early stages when it comes to the developing world and UHC. But I think that the household benefits that have been documented so far make a strong case.

And when you see what the political leaders who have ushered in UHC and their countries have spoken about, it is indeed these household benefits that they say we cannot have our people burdened not just be health events, but by the catastrophic costs that come – can come with them if we hope to grow into the future. And some of the most far-sighted leaders have recognized this, and I hope that more will in the future. Thank you.

MR. HUANG: Thank you, Daniel. Actually when I was listening to your report, received this message from the Kaiser Family Foundation about recent poll data on the American attitudes toward the Affordable Health Care Act that said there was a perfect divide on the Americans' attitudes toward the act. Indeed they found that more than 50 percent of all Americans still believe that the Supreme Court should rule it's unconstitutional, the individual mandate requiring nearly everyone obtaining health insurance. So – (chuckles) – despite that the – all those – the benefits that Daniel alluded to, the – it seems that Americans still haven't realized that. (Laughs.)

MR. ALTMAN: Well, I'm not a constitutional lawyer, but this may be unconstitutional. That doesn't mean it's a bad idea. (Laughter.)

MR. HUANG: So, OK. Alex?

ALEXANDER S. PREKER: Well, thanks very much for having invited me here, Laurie and others from the – from New York, and I – it's – I'm delighted as a preliminary to my – to be here in this office. It's – congratulations to the council for having set up this new office here. So it's really nice. We'll have to come and have some of our meetings in the World Bank here.

MS. GARRETT: Yeah, that long walk two blocks away.

DR. PREKER: Exactly. So we – I'll forego the reimbursement on the taxi this time.

MS. GARRETT: (Laughs.)

DR. PREKER: So this is an immensely important topic, and it's interesting because Rob Hecht, who's here from Results for Development – he and I were working together in 1993 when the bank was doing its world health report on "Investing in Health," and one of the interesting things at that time was that we came up with some statistics that showed that although 90 percent of the disease burden in the world is in developing countries, only 10 percent of the financing is there. So there was this very big disparity between where the needs are and where the money is at the global level.

Interestingly enough, if one looks at the data now, you know, which is almost 20 years later, it's not like that. It's 60-40, which demonstrates the change that has happened in the last 20 years in terms of distribution of financing globally. So you now have the BRIC countries – if you take the BRIC – and Goldman Sachs had coined this idea – Brazil, Russia, India and China – with "S" in the – in brackets – South Africa (was ?) sort of – was supposed to be part of that – and then, once they got through that, they added "N-11," the next 11, which includes countries like Indonesia and Malaysia. But what's interesting is how have those countries now performed in terms of – in terms of this agenda? Because one could say that, well, it's the BRIC N-11 that really would have the largest capacity.

So let's look at whether or not those countries have actually been able, during that 20 years, while this shift in funding has actually taken place – you know, has there been a change in the way that the population might have access to that – that financing? So if we just look at the table now in – on page 10 for a second – and I think Daniel kind of highlighted this – but I just want to draw out a couple of observations on this table. So it's on Page 10.

So it's interesting that when one looks at places like Kenya, where the size of the pool is 7 (percent), and then out of pocket is 51 (percent). And then you go down the list – Mali is the same, 3 (percent), 52 (percent); India a bit further down, 9 (percent) and 50 (percent). So the observation is that, you know, countries that really have poor coverage or poor pools end up spending a lot of money out of pocket. And of course the troubling part is then, when you now go further along and you see a place like (Turkish ?) Republic, which is 97 percent coverage – well, it's still got 40 percent out of pocket. And if you go down further on the list there – Philippines, 80 percent coverage, but 52 (percent) – (5)4 percent out of pocket. And then you go down to the bottom, which is where we would like to see it, Colombia and Thailand where 88 percent and 72 percent for Thailand; Colombia, 88 (percent). And there you have 8 (percent) and 16 (percent).

So I think this where we now – need to now be thinking a little bit. How is it that at least two countries have succeeded in reaching the coverage level and then, at the same time, doing something about that out-of-pocket exposure that they – that the population has to health expenditure? And then other countries that, you know, one would say would – you know, they're part of the BRIC – you know, India is there; I don't see many of the other BRICS in there. Chile is not – no, China is not there.

MS. GARRETT (?): Brazil is.

DR. PREKER: Yeah, Brazil is there. So Brazil is there as well.

And these countries are actually not doing well in the distribution of the – of the funding and clearly have not succeeded in putting in place a mechanism that dealt with that out-of-pocket side of the expenditure. So that raises a couple of issues, which I think is really the crux of the matter is that, you know, there's an ideological debate about scaling up and then there's the pragmatic debate about what you do about it.

And I think this, in some ways, is also the thing that U.S. is facing right now. You've got the – you've got the ideological debate, but then you have a pragmatic debate. You know, what are the solutions and how do you actually achieve it? And that now – one of the pragmatic solutions is being challenged of course in the Supreme Court. But, you know, this was one of many options. It was not the only one, but it was one of many. And now that's being put to a test to see how consistent that is with other principles in society, and that's precisely what we find in many developing countries.

So I worked a little bit in Ghana in the early – well, 2003 to 2007. And we helped the Ghanaian government at that time put in place a scale-up program for health insurance, essentially what – at the time that we started working with the government, they had – they had inherited a British-style health system, which was basically free care, universal coverage. So going back about 45 years, that's the kind of system that they had inherited. So on the – on the surface of it, you would say, well, that's great; you know, they – I mean, they came from a background where they had full coverage, and everybody had entitlement to services.

Well, within 10 years after the colonial powers left, that system collapsed because the system didn't have enough money, and so what happened was that although you had a rule that said everybody has access to care, that rule eroded in practice, and people ended up spending money out of pocket because there wasn't enough money in the system. And then the government even came in with – initially, it was an informal kind of payment, but then the government eventually came in with a rule that said, well, if you are going to come to a public clinic, you have to pay something because, you know, our clinics are going bankrupt, so the Bamako type of thing that, you know, why shouldn't we be getting part of the money in the public sector, because we know you're paying the money anyways out of pocket, so why shouldn't the government benefit, and so we can finance part of our health service with that money out of pocket?

And so they brought in a rule that – which was called in Ghana a kind of a nice term – it's called "cash and carry." You know, you come in with your cash, and you carry away the services. So they brought in that kind of a system. And that worked OK for a while. It did help a lot, studies that were done that showed that – like in Bamako, it showed the institutions that were collecting and were allowed to retain those fees that they did collect out of pocket ended up being better staffed and ended up having at least drugs so that when people went there, they actually got treated, whereas the clinics that didn't have that, although in principle, there was free care, basically, people were getting nothing. So they got free care, but they got free care to nothing.

And I think this is what we are seeing in some of these places here. When you look at the – when you look at some of these statistics – (inaudible) – public, when 98 – 97 percent is free care, but clearly, they're getting nothing, because they are paying 40 percent out of pocket. So, you know, they are not getting what they want, so they are – they are choosing to finance.

OK, so Ghana then decided, OK, we're going to abolish the "cash and carry," and instead of that, if people are willing to pay, why don't we, instead of having people pay at the point of service, why don't we just put that money in a pool, and the – I mean, clearly, the population is willing to pay, so that's good, so let's now take advantage of the fact that the population is willing to pay, we'll put that money into a pool, and we'll make that into an insurance program so that that way, everybody contributes a little bit, because you know, the evidence is there that they are willing to pay, but instead of paying when you get sick, people will pay ahead of time, and we create a health insurance system. So that's essentially what they did. They created a health insurance system, and then they said, well, but you know, many people can't afford to make that small contribution, so we're going to subsidize the people who can't afford to pay the premium.

And what ended up happening then, of course, is that they put in place the system, and coverage went up very quickly to 70 percent. And then the thing unraveled because what was happening was all sorts of administrative things: The system wasn't able to clear the bills; they weren't able to handle the claims; they weren't able to register poor people, so even though poor people had access to the services, actually, poor people weren't getting registered, not unlike in the U.S., where you have the Medicaid patients – often there's a – you find – (inaudible) – statistic shows that many Medicaid patients actually don't register. It's either too complicated, or they don't register, or they may be illegal workers or whatever. There's a lot of reasons, but they don't get into the system.

And so we found the same thing, that, you know, even though you have the system in place, the people who really should benefit, the rules are there, but they don't come in. And so I think once again we are seeing this here in this table, and which you are highlighting in this report, that the rules by themselves aren't enough unless you couple them with some pragmatic institutions. You know, and part of it is the human resources that you were mentioning. But there are a couple other very important things. And you know, drugs and equipment are two very important elements of a – of the health system that we often forget. And when you look at the expenditure in a health service, often the big expenditure item is actually drugs plus human resources. So in many – in many emerging economies, you can have as high as 50 percent, even 60 percent of the whole health expenditure is actually on pharmaceuticals.

So once again, it means that a single thing can't solve the problem. You really have to have – it has to be an – universal coverage can't go by itself. It can't just be the front end where you're collecting the money, and then you say everybody is covered. It has to go along with institutional reforms. I think the report nicely highlights some of those institutional things that you think are important in this.

And then I just want to end on one note is that those institutions, we often think kind of in concrete terms that those institutions are things like buildings and, you know, bodies – buildings and bodies and drugs and the equipment. But I'm now beginning to work in a part of the bank which looks at how better to work with the private sector. I work in the IFC part of the bank. And I work in a part of the IFC which is called the investment climate department, where we are looking at investment policies toward the private sector and whether or not those investment policies actually encourage the private sector to, one, be functional, and second of all, to have some sort of a social benefit.

And it's really interest, a report that we have just come out of, following a survey that we did in the Africa region, which shows that many governments put in place programs that intend to mobilize resources and energy from the private sector. In fact, I think the statistic was somewhere close to 80 percent actually have rules about that. And only 6 percent actually implement them.

So one of the big challenges, I think also in the insurance side, which we find in many countries and which once again you are highlighting in this report, is that the capacity to implement really has to be there, and it goes beyond the brick-mortar, the bodies and the – and the drugs. And it includes some of the rules and regulations and how those rules and regulations are enforced, but also the culture of the population that's using those services and whether or not those populations end up behaving in a way that's consistent with the new system that's in place.

And with that, I'll just highlight a small final example that once again comes from Ghana, where you had a mother that came to a clinic with a child and was somebody that came from a background where she could have belonged to – you know, she could have belonged to the insurance scheme, or she could have been subsidized through the subsidies program. And once she got to the clinic, she didn't have coverage. And so the clinic said, well, I mean, the rules we have is that you have to have coverage, and if you don't, we can't give you care.

And so she was turned down. And this of course became a very big scandal. It became a – you know, it became a political fiasco for two reasons. One, it was a political fiasco because, you know, why should a mother with a young child be refused care? You know, so that – you know, there was a moral aspect on the treatment part. But it was also a fiasco because it was a PR fiasco because of course if she had gotten the care, you now destroy the whole health insurance system because every other mother with a child would say, well, when we get sick, we can just walk in and we're going to get care, so why should we bother paying? So it opens up the floodgates with moral hazard and noncompliance.

And I think that really demonstrates the very difficult position that governments and countries are in that are trying to do scale-up, that when you are trying to put in place things that will work, you will be forced – you – to confront that moral dilemma when the child and the mother comes to the clinic and where you have to make a judgment call. And unfortunately, of course, what often happens is that the individuals or the health care providers that are at that point of conflict, in the front line, end up making the wrong judgment calls at that point. And that of course is the big challenge that we face in many of these reforms that we're doing.

So I think this is a tremendously timely report. Congratulations on some of the insights that you have in it. And we look forward to teaming up with you and taking this agenda forward, Laurie and others. So –

MR. HUANG: Thank you, Alex.

And to the story that you shared with us on Ghana actually until very recently happened every day in China, I believe. (Chuckles.)

The – so as a presider, I have the privilege to ask the first question. This question will be about the relationship between the universal health coverage and equality. I think it is addressed in the report, although I probably didn't – in the talk, didn't allude to – but the – my question is that universal health coverage, by definition, means fairer, more efficient financing that pools risk and encourages prepayment to share health care cost equitably across the population. But the report seems to also indicate that there is no strong evidence supporting that spread of universal health coverage necessarily reduces inequality of health care access. So my question is: In what situation would universal health coverage lead to persistence, if not exacerbation, of inequality?

MR. ALTMAN: Well –

MR. HUANG: Daniel?

MR. ALTMAN: Yeah, in answering your question, Yanzhong, I'll draw on a conversation with Julio Frenk last year. He's the former minister of health in Mexico and now dean of the School of Public Health at Harvard. And we were talking about what would improve health outcomes in developing countries, and we discussed the extension of care on a broader basis. And he said it's not going to make a fundamental difference to the lives of a lot of the poorest people until the bigger issues of inequality are addressed; that it – there is a chicken-and-egg problem here in the sense that inequality can breed poor health outcomes for people at the bottom, which can then worsen their outcomes in the labor force and thus worsen inequality in the long term.

But I don't think I would start looking to universal health coverage to be a major reducer of inequality until some of the more fundamental drivers of inequality were addressed. It may have some effect on the margin, but there are such enormous other drivers at work right now – for example, just the opening of markets through globalization seems to decrease inequality between countries but increase it within countries, in many cases. You know, with that kind of wave percolating through your economy, it might be difficult to pick up the effect of UHC. But I would never underestimate the abilities of a skilled empirical economist in a randomized controlled trial.

MS. GARRETT: (Off mic.)

MR. HUANG: OK, I wonder – to both Laurie and Alex, can you respond?

MS. GARRETT: Well, I – I'd like to take Alex's bottom line, the woman in Ghana going with her child for care and being turned away. There's a number of ways that scenario could have played out, and I've personally seen it play out in every one of these ways. One is – goes to the inequality question.

I remember very well doing a series of following women who had babies in sub-Saharan African countries with high fevers. And it was fevers where it's a matter of life and death to seek appropriate care within – you have maybe a 24-, 48-hour window or the baby dies. In most cases, it was either – it was measles or malaria.

And what I saw was, these women typically lived in the rural areas, but their husbands or the fathers of these children were typically in the cities, where they had a second family and lived a completely separate life. The women could not and would not violate relations with their husbands to go straight to the nearest clinic. They would go to the city, find the husband – with the ailing baby – get his permission and then go to the clinic. So no universal health coverage access is going to save that baby's life if the inequity in the gender relations in those marriages and across whole societies is an impediment to getting the appropriate care when you need it.

But also with this example of the mother and ailing child, she may very well have had coverage and then gotten to a clinic that had no M.D. in the entire clinic, had no equipment, had no skilled personnel, or had – as we've all seen, if we've traveled widely in poor countries, had an alleged doctor, alleged medical staff, alleged equipment, and no electricity, no running water and no appropriate hygiene, so that seeking care could actually be a life-threatening event. So if all pieces are not in place, you obviously don't get to nirvana and you don't get to equity.

And then I guess the final piece of the equity question is something that we all see around the world, the difference between rural and urban, and one key piece of that is not just that health provision is very concentrated in urban areas but also that your ability to access it will depend on your personal finances because you still have to pay for transport. So even if once you get to the clinic, the care is covered, you had to get there, and that becomes the other rate-limiting step that is class-biased.

MR. ALTMAN: Yeah. Can I just add one sentence onto that, which is, a lot of people say, isn't it easier for poor people to go to the hospital than rich people, because the value of rich people's time is so much higher – you know, they – if you have a hundred-dollar-an-hour job versus a minimum wage job? No, you're looking at it backwards. The problem is that that that minimum wage means a lot more to that person than a couple of hundred-dollar-an-hour hours to a wealthy person, and it's much harder for them to take that time away in going to the clinic, even if all the pieces of the puzzle, as Laurie said, are there.

MR. HUANG: OK. Alex?

MR. PREKER: OK, so on the universal – and equality, there's a troublesome dimension to that, and that is that in higher-income countries, it makes a lot of sense. If – you know, I'm Canadian. In Canada, everybody has access to care, and that means poor people and rich people have access to care, and Canadians are rich enough so we can afford to give away care to both rich and poor people.

But the problem is, if you're living in Mali or in other very low-income countries, and you've got a hundred dollars, and you've got a hundred people, and you give $1 to each one of the hundred people, both the people who are rich and the people who are poor, then everybody's getting $1. But if you took the hundred dollars and you gave the hundred dollars to only the 20 people who are really poor, each one of those 20 people would be getting $5, and the other people would be getting – maybe spending other money, but they have the money to spend out of pocket, and therefore you'd actually be more successful in having equity by not extending universally and spreading the finances thinly across the whole population.

So I think this is where we have the tension, I think, at low-income countries between the ideology of what we think is universalist and therefore, you know, it's good for the poor, and the reality of the economics; that when you actually do that and you execute it, you're actually taking money away from the poor whenever you have a program which is universal.

MR. HUANG: Very interesting.

So we have about 35 minutes. So I want to open the floor up to questions. Please identify yourself and your affiliation before responding. Please also flip your tent card to indicate that you have a question, and we also allow one-finger rule at – if you have any quick follow-up remarks.

So I'm going to start with Jeanette.

Q: Thank you.

MR. HUANG: Oh, by the way, Jeanette is the new managing director of the Rockefeller Foundation in charge of health.

Q: Thank you. Very interesting for me, because in fact it's a discourse that I am not familiar with. In fact people that are from developing countries, in general, when we talked about universal health coverage, we basically talked about access to care, not necessarily about the financial impact. So it has been very important for me to sort of listen to the discussion. I understand that there is an issue there; that basically the implicit assumption is that if you increase coverage, financial coverage, you will increase access and then you will improve health outcomes. I would challenge that, though, and I think that we need to discuss, probably in a different forum, about that implicit assumption.

Now I'd like to make a comment – a couple of comments. The first one is the comment on universal health coverage and equity. In fact the issue there is in whatever dimension you are talking, if it is the financial dimension or the access dimension, in the road towards achieving 100 percent – let's say from 10 (percent) to 100 (percent) – not all the groups of the population benefit the same. So in fact when you begin to implement this – basically, in the road to universal, you create more inequities, unless you focus on beginning with the worst-off, which is what UNICEF in fact is doing in its newest strategy. They are basically making the case. And if you do the costing and the economic exercises, you realize that it's much more cost-effective to do it in that way.

And then the other comment – and then I just want to use Table 10 as an example, because here there are some examples. There's one example that I know very well, which is the example of Chile, because in fact I'm Chilean. And you are saying here – the tables say here that we implemented the universal health coverage in 1979. I would say that in fact we destroyed universal health coverage in 1979, because until then we had basically a system that had one pool that provided access to everyone. The depth of the package, though – of course the system regulated through waiting lists, and in 1979 what happened is that the pools were divided into two, one private – I mean, several private, 15 in fact – and one public.

And why I'm putting this example – not because I'm from Chile; I'm putting this example because it depends on your definition. I mean, if you think about the former Soviet Union countries, according to the definition of universal health coverage, they did have universal health coverage, and from one day to the other, they didn't have it. And what we are having now, it's basically the rebuilding of the universal health coverage using different instruments.

And you can argue that in fact, it was a theoretical universal health coverage because people didn't get covered. In fact, they did; the issue was that they didn't get access to services.

So what I'm trying to say is that the discussion, I think it's a bit more broader because it has to do with some historical process of reforms that I think Alex said in his intervention. And it's very interesting to continue this conversation.

MR. HUANG: Jeanette, you mention the Soviet case. This actually remind me of China. Actually, China recent – just a couple of days ago, announced it has achieved universal health coverage. (Chuckles.) So covering 100 – 1.4 – nearly 1.4 billion people, well, that is truly an achievement, right? (Chuckles.) Laurie.

MS. GARRETT: I think you raise some very important points, and they actually were all points that we debated and grappled with through this entire process – you know, trying to find a way to focus in and not end up producing another 1,000-page document that nobody reads. Well, hopefully somebody reads this. (Chuckles.)

But, first of all, yes, different countries have tried to roll out universal health coverage in different ways. And many have, in fact, done exactly what you said: target the neediest first and work your way backwards. But as Daniel pointed out, many countries, this being one of them, has rolled out universal health coverage in ways that do not reflect needs, but rather specific groupings – military or – in our country, really tying access to coverage – not care, but coverage – to site of employment so that it became part of labor negotiations beginning in the early part of the 20^th century. And companies that had organized labor tended to have good health insurance coverage, and those that didn't lacked it.

So different countries have rolled out their systems in various ways. And I think often, the one that gets the most praise is what Julio Frenk rolled out in Mexico. But I think it's also instructive – and we have some citations to follow up if there is interest – I think it's also instructive to see the struggle that Brazil is having right now, because Brazil did, in fact, roll out very aggressively for the poorest population tier and created great tension within the middle class in Brazil that they're still struggling to cope with and to figure out what is justice and equity with some payment and some nonpayment in a system as complicated and massive as the nation of Brazil.

MR. ALTMAN: Yeah. It's – I agree very strongly that these are important issues to take into account, and I think that everything you said makes sense in theory. In practice, when you deal with the logistical and political implications of rolling out a system like this, it seems like, from experience around the world, it's easier to roll out a system to everyone and then start layering on the services rather than to start with a lot of services for a small group and then start layering on other populations for partly the same reasons that Laurie was referring to. But I would also point out that if you just start out providing care to the poorest, you're losing a lot of the potential benefit of risk pooling because you're targeting a population that's the sickest in society.

MR. HUANG: Alex, you have a –

MS. GARRETT: Add anything to –

MR. PREKER: No.

MR. HUANG: OK. Irena (ph)?

Q: Thank you so much for such a great panel, first of all.

I have a question related to a presentation, two months ago, of Georgian President Mikheil Saakashvili at the World Bank. And in his speech, he spoke about achievements in Georgia. And one of the achievements was hospitals all around the country. He calls these hospital like five-star hotels. And these hospitals are available for everyone.

And in this context, I would like to ask this distinguished panel and especially Alex how it was made by coverage, how you see this model, because Georgia is not a rich country; probably it's a(n) emerging economy; maybe we can call it from poor-to middle-income country. And do you think this kind of model could work for other countries like this kind – this type of countries?

And the other question is about equality, because even President Saakashvili stressed that all people, rural people, poorer people could come to this hospital. They are – have modern equipment. But anyway, they are not equal. I'm – but he said, for example, once in their life they could be – could have appropriate service – and how it's related to question of equality.

And following – so Canada is famous for its health coverage. Why other countries, for example, United States, cannot follow this example in health coverage?

MS. GARRETT: I'll take the latter, you take the former. (Laughter.)

MR. PREKER: OK. Yes, then I don't have to defend the Canadian system. (Laughter.)

Well, I think Georgia is quite typical of what happened in the – you know, the states that were part of the former Soviet Union after the collapse of the – of the former Soviet Union. I've been to Georgia several times, and – so I know exactly what you're talking about. The problem was that very shortly after the transition, the bank – the government in Georgia basically went bankrupt. It had a compression of economic growth, of – I think it was, like, 70 percent. It was one of the most hard-hit of the Eastern European countries in terms of – in terms of collapse of the economy.

And so essentially the government was bankrupt, which meant that they had a very large stock of facilities, hospitals and also doctors that were on the payroll, because everybody was a civil servant on the payroll, or at least a government employee, and no money. And so people were not – basically, the salary bill stopped, people would no longer get paid, and there was no drugs in the hospital. I remember the last time I visited, which was I guess now close to 10 years ago, but at that time, you know, I had to walk up seven stairs because, you know, there was no light, there was no electricity. It was – basically, the service had collapsed.

So in a context like that, you know, if you have one functioning hospital that actually is functioning, I mean, there is a need for tertiary care in Georgia like there's – anybody – anywhere else in the world. I mean, this is a country – it has a lot of chronic disease and a lot of acute disease that need to be dealt with. And, you know, you can die in the street or you can die in the hospital.

But the issue, I think, that Georgia faces with this kind of a situation was – it's the same as we face in many other parts of the world – is if that hospital, now is functioning, was reserved and could be used only for the acute care that it was built for and not be giving primary care and stuff that could be given in clinics, then you might end up having something that actually works. But the problem is, because the rest of the health services collapsed, if you have one institution that has been made functional and you have the rest of the service that's collapsed, even in Georgia, this is never going to work, because you can't have 6 million or whatever it is that your population is – you can't have 6 million people coming to one place and getting care for primary care. It just – it's just not going to work.

This institution will collapse unless, you know, it's – unless that institution sits on top of a – the pyramid of a large health service. So I think this is a – and it's a difficult dilemma many countries face, is because you like to have one place which provides decent care, but you're not going to – 6 million people are not going to be able to get care from that one place.

MS. GARRETT: When I – 14 years ago, I traveled the – all over Georgia looking at their health system. And I think that the Georgia example is actually an interesting one that – for you to have raised because the advantage that Georgia today has is that the vast majority of the society truly rejected the Soviet model of health, and what they were left with was something so horrible – I mean, some of the worst atrocities I've ever seen in health care delivery, I saw back then in Georgia – you know, physicians with no gloves performing surgery, not able to scrub beforehand because there was no soap. So there – in a sense, they have an advantage now in that the – there was very little support for keeping what had existed and great possibility of coming in with a clean slate and trying to do the right thing. And similarly, Canada built its health system long ago on a clean slate.

The United States has built incrementally hundreds of different health systems so thoroughly fragmented, each with its own interest groups dependent on its continued existence, that trying to create a single or even a workable financing mechanism is impossible in America. The best we can hope for is to make these fragmentary pieces work together a little bit better, be a bit better regulated so that they can't price gouge various elements of funding, and create better equity and pooling for the largest elements of the system. And that's what the health reform act tried to do. But, as you can see, there are many interests that seek – see that they will lose if that is fully implemented and therefore are very actively fighting against it.

MR. HUANG: That's exactly what Debbie Fuentes (ph) said: just 90 percent politics, 10 percent technical-institutional details. (Laughs.)

Let's see whether we have any questions from the participants – from the teleconference participants. Anybody?

MS. GARRETT: On the phone.

MR. HUANG: On the phone?

OK – (laughs) – nobody. So Ben (ph).

Q: Bart Szewczyk (ph), Wilmer Hale and G.W. law school. Thank you very much for all of your presentations. I wanted to ask, is there any empirical evidence between the degree of universal health coverage and long-term economic growth? I guess those studies would be probably difficult to do, but is there any evidence one way or the other?

MR. ALTMAN: Short answer is no. If you're referring to sort of cross-sectional-type of analysis, that would be very difficult because the universal health coverage systems are so different that to throw in a single dummy variable for them would not give you a very good regression. So not putting it into technical terms, I think that would be very tough to do, to look at countries in comparison to each other and see whether there was an effect on growth. If you looked within one country, you'd have a better shot of finding an outcome.

And there have been some studies even in the United States looking at Medicare. It's not completely universal, but it's universal for part of the population. And the idea was to take the burden of caring for the older generation away from people who could be otherwise productive in the workforce, in addition to all the other benefits that it might have. And you know, I think that there's some evidence to support positive effects, but spotty and not necessarily so generalizable across contexts that I would want to take it from one country and apply it to another.

MR. HUANG: Comments?

DR. PREKER: Yeah, I mean, there's been – recently, there's been the commission of growth – health and growth. So if you want to look at what they did, you – it's worthwhile just Googling that.

I mean, there's basically two problems. One is that we haven't agreed on what universal coverage is, and so it's hard to do regressions against something you haven't defined yet. And so it's not an easy thing to draw the correlation.

But there's a reverse correlation, and that is that countries that tend to go through rapid growth tend to become more inequitable during the growth phase (till you get ?) industrialization process. And during that inequity period, you tend to have health care becoming less equitable, like you saw in Georgia and other countries in Eastern Europe. So one has to be careful about the cause and effect there. But certainly if one looks at the world where you have rapid growth and economic growth, like China, those places – those places have become much more inequitable in health care. I don't think it's the health care that led to the growth, because you would then say, well, inequitable health care leads to growth. No, I think that's not the way it is. But I think you can expect to see inequity in health care appear when you have rapid population growth in some areas and where part of the population ends up having purchasing power, which means that they can buy care that the general population can't afford.

MS. GARRETT: Can I follow up?

Alex, I want to ask you about something. The – one of the things we've seen in the most rapidly expanding economies in the late 20^th or early 21^st centuries. If you look at China, if you look at post-Soviet Russia, you look at – less so at Brazil, and certainly in India, you see that as these economies explode, the public sector salaries for those that are not engaged in highly corruption-prone sectors do not keep pace with growth in the private sector. So there's the envy-of-your-neighbor problem, and that seems to compel, in a way, an increase in corruption in direct health provision so that – for example, I saw myself in China, a doctor will say to a patient, here's what – here's the free syringe; I can now give you an injection with it; it's been used before. (Laughter.) Here's the one that's still in its packaging, but that'll cost you $50. Do you want me to inject you with this one or this one? And that $50 is going to the doctor. So is there a way to have this economic growth without also enhancing not only the lack of equity, but also corruption within the health sector?

DR. PREKER: All right, I don't have the answer to that. I mean, we know empirically that countries that go through a very rapid growth period, you have social consequences. And so it's one of the things that is there. And you know, when you (saw ?) – the definition of emerging markets by Goldman Sachs is it's growth in the double digits with large populations and where you have population dynamics that's moving towards aging. So that's the – you know, that's the definition of an emerging economy, and I think in most of the emerging economy, you've had – you've had problems in the health side. So they go through a phase and then, you know – then eventually, when you have a sufficient middle class that ends up with political power, then that middle class starts demanding social services that are reasonable for the middle class. And that's what you're basically seeing now in both China and India. You have the growth phase, and now you have a middle class that's beginning to say, we're not happy with this anymore; we're – you know, we want change. And so (there's ?) this change happening in both China and in India.

MR. ALTMAN: (But ?) that creates an additional causality problem because it's the income growth that's leading to the health coverage, not vice versa. (Laughter.)

DR. PREKER (?): Yeah.

MR. HUANG: OK. Jesse?

Q: Thanks. All right, Jesse Bump, Georgetown University. I just wanted to point out there's a tension between what we in the global health community think about as universal health coverage, which tends to be focused on equity and focused on the poorest and largely I think that comes from the mindset that that's the missing piece in existing health systems. But, as we move into the sub-Saharan and other areas where there really aren't very many systems themselves, I wanted to point out that in the health systems I've studied, none of them have come from the poor. They're all built around a paying customer at the beginning. And as Daniel said, this amounts to a rationing question, and rationing means it's an ethical issue that then has to get solved at the implementation stage around the history, politics, and economics of a particular population. Thanks.

MR. HUANG: Comments?

MS. GARRETT: Absolutely.

MR. HUANG: (Laughs.) OK, fully agree. Robert?

Q: Is that working? OK. Robert Hecht from Results for Development. This looks like a great report, and I'll read it – read it carefully.

It seems to me if you look at what's going on around the world and try to understand the trends in health systems, health financing, access to care that Jeanette was talking about, financial protection, both of those dimensions, there – there's a lot of common language around universal coverage and there is some commonalities. But in my own observation, I think there are a lot of submovements within geographies and things are happening at different speeds and different ways, and I wonder if you've been thinking about that and would – will be bringing it out in some of your future work.

In my casual look at things, it seems like there are lot of what I would call second-generation changes in health financing arrangements and coverage in some of the middle-income regions: Latin America, which already has a long history going back to the '60s, '70s, '80s; Eastern Europe – some of the Eastern European countries that made dramatic moves in the '90s and are now – they're burnishing their systems and making some gradual changes; Korea, which has recently merged many of its risk pools into a single one; Turkey – there are – there are – there are some trends going on that I would call second-generation type ones.

In the OECD countries, we see this as – it's a – it's a – it's a never-ending process, so there are third- and fourth- – very interesting things going on in the Netherlands and in the U.K., and the NHS is constantly being reconfigured and reformulated.

So the notion that there's not a single ending point but there's a constant evolution and that individual countries and groups of countries are moving at different speeds, I think, is worth reflecting on.

In my own opinion, Africa is really at a stage of early experimentation and nothing more than that. There's a lot of hype right now, but – and there are some interesting things going on in places like Ghana and Rwanda and smaller-scale things in Nigeria and Kenya and places like that. But it's early experimentation, I would say.

I think that the part of the world which is most exciting right now is East Asia and maybe India added because there, with rapid economic growth, all the political and economic underpinnings are there for quantum changes within these systems, and that's what we're seeing in China right now. India is thinking very – in very big terms, and it feels – is feeling its oats or whatever you call it, and wants to make some dramatic moves, is watching what China's doing. And places like Vietnam and Indonesia and so on you see, again, attempts to really complete somewhat fragmented systems.

So trying to get a little more nuanced, maybe, would be – would be just an interesting suggestion for you to think about when you consider what's going on across these different geographies.
The question I had, maybe for Laurie – because I know the council, when it does important work like this, often – it has a special – a special strength or comparative advantage in answering the question, well, what does this mean for the U.S. and for U.S. policy? And I didn't see anything in there, and I just wondered: Is that the next move? What does this mean for Raj? What does this mean for the CDC? What does this mean for Obama? What does this mean for the global programs that the U.S. supports and has a major say in, like the World Bank and the Global Fund and so on? It seems a little silent on the question of so what for U.S. – Council on Foreign Relations – (laughter) – for U.S. foreign policy? So I wondered if you could comment on that.

MS. GARRETT: OK.

MR. HUANG: The U.S. is the outlier. (Chuckles.)

MS. GARRETT: Well, I mean, as usual, Bob Hecht comes in with the key question and also fascinating observation about regional shifts. I was surprised you left out Singapore, because many people think one of the most exciting sort of new health systems is Singapore and – financing model.

Q: Medical savings accounts?

MS. GARRETT: Well –

Q: I don't think – I don't think so. I think that's –

MS. GARRETT: OK. I'm just saying.

Q: – that's the past, not the future, but –

MS. GARRETT: I'm just saying.

As far as the U.S. goes, we had many ways to try and tackle the UHC question. Probably most awkward one was, as Americans, to try and talk about health coverage. If there's one thing truly wrong in the United States, it's our tremendous inequity of affordable access to health care. And so I don't – we didn't feel particularly comfortable with being in the role that the United States should be telling the rest of the world, you know, how to finance health, but also that the Global Health Initiative's whole component with the sort of brass tacks of what it imagines to be health coverage and systems work is still very, very infant stage. Ariel Pablos-Mendez didn't even get in there until about a year ago – not even a year. Is it? How many – it's – 10 months ago?

Q: August.

MS. GARRETT: August. So – and then I think the other piece that added yet another layer of awkward to the question of what do we recommend about U.S. foreign policy is that we're all realistically on the edge of our seats what's going to be left of the U.S. support for its own account 150 budget by the time the FY '13 fight is over. And it's pretty hard to go out on a limb and say, and so then we should all do this huge program around universal health coverage or something if in fact we're going to be fighting to just keep very basic aspects of U.S. global health programming funded after, you know, October 1^st or after – whenever we stop being – borrowing money to keep the lights on in Washington and actually pass a budget, which probably not be until late January 2013 or even February 2013.

MR. HUANG: Daniel.

MR. ALTMAN: I would just say, very quickly, if you can't give money, you can still give advice – (laughter) – and I think in this paper –

MR. HUANG: (Chuckling.) Really?

MR. ALTMAN: – in this paper, we're trying to highlight some of the issues that are worth considering if you're a country that's thinking about a UHC program. And we don't take a position on what U.S. policy should be, but if I had to take a guess, that – U.S. policy would at least look at some of these very same issues.

I wish we had much more space to write about the regional shifts that you're discussing and some of these other issues, but as Laurie said earlier, we decided that the best thing we could do here was take a very focused look at one chunk of the problem where we seeing some early and immediate results and try and push the dialogue in that direction.

MR. HUANG: Alex, you want to comment?

MR. PREKER: No, that's fine.

MR. HUANG: Oh.

MS. GARRETT: I think Robert –

MR. HUANG: (Chuckling.) OK. Robert, yes.

Q: Yeah. Thank you. Thank you. I just had another comment and I just wanted to first say that I think this discussion has been really useful, and I just want to thank all of you for putting in the time and putting together the reports and bringing this group of people together.

And I think some of the questions that have been raised here, particularly around, you know, does UHC work, the kind of – one of the more fundamental questions – I just wanted to call everyone's attention to the fact that in September the Lancet British medical journal is putting together a special series on universal health coverage, and it will be launched then, and I think a few of the papers in that series will begin to answer some of the questions that have been raised here. But as those papers are currently in the review process, I don't want to say too much more, but I just wanted to raise the flag and put that on everyone's radar, that that will be coming up in a few months. So stay tuned for that.

MR. HUANG: Thank you, Robert.

I guess there's no questions from – but – so I'm going to ask if there's – OK. I'm going to ask the final question, again using my presider's privilege. It's about this relationship between universal health coverage and costs of care. Because obviously the report – it was on Page 13 – made it very clear that even the evidence collected to date makes a strong case for UHC as a way to cut costs, I'm curious: What kind of costs are we talking about here? Because if you look at the countries, economies such as Taiwan and China, there seems to be no indication that the spread of the UHC program would – leads to the reduction of the total health spending, because you could have the case, like in China, right, spread of UHC – actually the drop of the share of out-of-pocket spending or actually now the share is – has – is going to – drop below 30 percent, which is actually really low. But in the meantime, you found that the total health spending continued to dramatically increase.

So that – if the salary level or income level can't catch up with the increase of total health spending, you would still end up paying in the – more out-of-pocket share , OK – no, not total out-of- – total out-of-pocket spending, I mean, in the – in terms of the actual – the dollar amount.

MR. ALTMAN: Right. So I think there are two responses that go back to things that we have alluded to. One is, if you're looking for these macroefficiencies to be captured where your country all of a sudden is spending less on health care or getting more bang for its buck in health care, it may take time. It doesn't necessarily happen right at the very beginning of the UHC program, especially since a lot of these efficiencies, we think, are going to come from preventive care, which may take decades to pay off, in some cases.

The second answer – and as – and I alluded to it in the case of Taiwan – is that utilization often goes up because the price has gone down, so your total costs end up being similar or even more. And sometimes it can go up much more quickly than you might expect. And then it's the question of whether there's moral hazard and whether you need to have some level of user fees just to keep it in check.

You know, we talked about the woman and her baby being turned away from a health clinic, potentially. You know, in the United Kingdom, which has a very well-known national health insurance system, though obviously not a perfect one, nobody gets turned away. They don't even ask you for any form of identification. They don't, however, give the best quality of health care that's available in the country. And that has some – that goes some way to controlling the moral hazard. Those other high levels of health care are available. You have to pay for them a hundred percent out of pocket or get a corollary insurance plan to the public health insurance you already have. But it allows that other option.

Now, that also introduces all sorts of new questions about equity and distribution of resources in the health sector that I'm sure Professor Bump (sp) and others would want to discuss with us. But I think that to your basic question about the overall macro level of health costs, there are those two basic responses.

MR. HUANG: Any other comments?

MR. PREKER: Well, just a quick economic response. Health care is a luxury good, and the observation we've had is that growth in health care is faster than GDP growth, which means that countries, as they get richer, are willing to – populations are willing to spend more. And that increases. So, you know, U.S. is most likely going to spend over 20 percent shortly. And there's no way of really stopping that. So the cost containment, which tends to be more in the public side – so when you put the lid on the expenditure in the public side, then it's natural people are going to spend out of pocket because if they can't get it on the public side, they're going to spend it personally because you've got a lot of – law of economics, and you've got to get the number up there somehow. So if it doesn't come from the public, it's going to come from the private.

MS. GARRETT: Well, and this in a way goes to Robert Hecht's point because we – you know, in terms of the regional variations in trends because, you know, the truth is if there's no capping of any kind, no personal limit on spending, most people will demand the absolute nirvana of health: I want to live to be 110; I want to die in my sleep having had no aches and pains before I die. I mean, who doesn't have that fantasy? But for a system to be built with that as the, you know, gold standard to be achieved universally for all citizenry and payment to somehow be available to achieve such a standard is entirely unrealistic and will bankrupt the society very quickly.

Well, I think we see now is all across Europe, where there's a great deal of experimentation going on, part of it is a realization that, A, the expectation level is too high in the population, so that not only is utilization extraordinary, but it's utilization for two weeks in a spa, you know, but also that the population is aging, so that the very expensive needs level is rising, that it's above expectations.

 

And I think it's realistic to look ahead and say, look, first of all, everybody's definition of what UHC is is going to be different. Each society is going to have its own cultural perspective, and that in many cases is going to reflect how the culture feels about health, how important is health in your culture, which kind of reminds me of a famous set of studies done by the Columbia Mailman School of Public Health back 10 years ago in the early days – 15 years ago – early days of the HIV pandemic, asking the question, why was it that uptake of HIV-related services and testing and even condom use was so poor in Harlem compared to down in Chelsea.

So you had two specific communities on the island of Manhattan, both at very high risk for HIV, absolutely diametrically opposite utilization rates for services, regardless of payment. And the answer was simply that in the Chelsea neighborhood, which was overwhelmingly white and where most of the individuals at risk were gay men, it was a community that thought health was at the top of its agenda. It was the number one issue in their lives, and therefore they really fought for every single service they could get, whereas in Harlem, most of the people surveyed said, well, let's see, health, any aspect of health, even my pregnancy and having a safe baby, is down here compared to not getting shot, paying the rent, finding money for food tomorrow, getting my welfare check cashed, et cetera, so that by the time you got to, do I have hypertension, or am I at risk for HIV, it was 15 seconds of your 24-hour agenda.

And I think that's yet another whole issue that plays into the regional variations and social variations and class variations in uptake and use of health services. We're just looking at a teeny little piece. And we hope that this has been helpful.

MR. HUANG: Thank you, Laurie. Obviously, this issue is much more complicated than we have expected – (chuckles) – that as the – this – the remarks of our speakers have indicated.

So that concludes our universal health coverage round-table series. I'd like to take this opportunity to thank our three speakers, Daniel, Laurie and Alex, for their contribution to this round-table meeting. And also, I'd like to thank the Rockefeller Foundation, especially Robert, for his crucial role in making that round-table series possible. And I'd also like to thank our research associates, and particularly Zoe Liberman – you have all received emails from her – and for her assistance in making that possible, and also for – (inaudible) – for her assistance this afternoon. And last but not least, I'd like to thank you all who participate in today's meetings for making such a lively and enjoyable discussion. And thank you. Enjoy rest of the day. (Applause.)

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